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                                                                   EXHIBIT 10.26

                SOUTHFIELD SECOND MORTGAGE AND SECURITY AGREEMENT

RECORDING REQUESTED BY

WHEN RECORDED MAIL TO

The Northwestern Mutual Life Ins. Co.
720 East Wisconsin Avenue - Rm N16WC
Milwaukee, WI 53202
Attn: Sheila Lawton
Loan No. C-332847

      THIS SOUTHFIELD SECOND MORTGAGE AND SECURITY AGREEMENT is made as of the
30th day of September, 2003 between BROOKDALE SENIOR HOUSING, LLC herein
(whether one or more in number) called "Mortgagor", and THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY, a Wisconsin corporation, 720 E. Wisconsin Avenue,
Milwaukee, WI 53202, herein called "Mortgagee":

      WITNESSETH, That Mortgagor, in consideration of the indebtedness herein
mentioned, does hereby grant, convey, mortgage and warrant unto Mortgagee
forever, with power of sale and right of entry and possession, the following
property (herein referred to as the "Property"):

      A.    The land in the County of Oakland, State of Michigan, described in
            Exhibit "A" attached hereto and incorporated herein (the "Land");

      B.    All easements, appurtenances, tenements and hereditaments belonging
            to or benefiting the Land, including but not limited to all waters,
            water rights, water courses, all ways, trees, rights, liberties and
            privileges;

      C.    All improvements to the Land, including, but not limited to, all
            buildings, structures and improvements now existing or hereafter
            erected on the

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            Land; all fixtures and equipment of every description belonging to
            Mortgagor which are or may be placed or used upon the Land or
            attached to the buildings, structures or improvements, including,
            but not limited to, all engines, boilers, elevators and machinery,
            all heating apparatus, electrical equipment, air-conditioning and
            ventilating equipment, water and gas fixtures, all carpeting,
            draperies, ranges, microwave ovens, refrigerators, dishwashers,
            computers, furniture, kitchen equipment, cleaning equipment, laundry
            equipment, automobiles and vans and all easily removable equipment;
            all of which, to the extent permitted by applicable law, shall be
            deemed an accession to the freehold and a part of the realty as
            between the parties hereto; and

      D.    Mortgagor's interest in all articles of personal property of every
            kind and nature whatsoever, now or hereafter located upon the Land
            or in or on the buildings and improvements and now owned or leased
            or hereafter acquired or leased by Mortgagor.

Mortgagor agrees not to sell, transfer, assign or remove anything described in
B, C and D above now or hereafter located on the Land without prior written
consent from Mortgagee unless (i) such action does not constitute a sale or
removal of any buildings or structures or the sale or transfer of waters or
water rights and (ii) such action results in the substitution or replacement
with similar items of equal value.

      Without limiting the foregoing grants, Mortgagor hereby pledges to
Mortgagee, and grants to Mortgagee a security interest in, all of Mortgagor's
present and hereafter acquired right, title and interest in and to the Property
and any and all

      E.    cash and other funds now or at any time hereafter deposited by or
            for Mortgagor on account of tax, special assessment, replacement or
            other reserves required to be maintained pursuant to the Loan
            Documents (as hereinafter defined) with Mortgagee or a third party,
            or otherwise deposited with, or in the possession of, Mortgagee
            pursuant to the Loan Documents; and

      F.    surveys, soils reports, environmental reports, guaranties,
            warranties, architect's contracts, construction contracts, drawings
            and specifications, applications, permits, surety bonds and other
            contracts relating to the acquisition, design, development,
            construction and operation of the Property, including without
            limitation, that certain Management and Operating Agreement by and
            between Grantor and Brookdale Living Communities of Michigan, Inc.;
            and

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      G.    accounts, chattel paper, deposit accounts, instruments, equipment,
            inventory, documents, general intangibles, letter-of-credit rights,
            investment property and all other personal property of Mortgagor
            (including, without limitation, any and all rights in the property
            name "The Heritage Southfield"), and

      H.    present and future rights to condemnation awards, insurance proceeds
            or other proceeds at any time payable to or received by Mortgagor on
            account of the Property or any of the foregoing personal property.

All personal property hereinabove described is hereinafter referred to as the
"Personal Property".

      If any of the Property is of a nature that a security interest therein can
be perfected under the Uniform Commercial Code, this instrument shall constitute
a security agreement and financing statement if permitted by applicable law and
Mortgagor authorizes Mortgagee to file a financing statement describing such
Property and, at Mortgagee's request, agrees to join with Mortgagee in the
execution of any financing statements and to execute any other instruments that
may be necessary or desirable, in Mortgagee's determination, for the perfection
or renewal of such security interest under the Uniform Commercial Code.

      TO HAVE AND TO HOLD the same unto Mortgagee for the purpose of securing:

      (a) Payment to the order of Mortgagee of the indebtedness evidenced by a
promissory note of even date herewith (and any restatement, extension or renewal
thereof and any amendment thereto) executed by AH Texas Owner Limited
Partnership, an Ohio limited partnership, ("Gaines Ranch Borrower") for the
principal sum of SIXTEEN MILLION FOUR HUNDRED TWENTY-TWO THOUSAND DOLLARS
($16,422,000.00), with final maturity no later than October 1, 2009 and with
interest as therein expressed (which promissory note, as such instrument may be
amended, restated, renewed and extended, is hereinafter referred to as the
"Note"), it being recognized that the funds may not have been fully advanced as
of the date hereof but may be advanced in the future in accordance with the
terms of a written contract; and

      (b) Payment of all sums that may become due Mortgagee under the provisions
of, and the performance of each agreement of Mortgagor contained in, the Loan
Documents.

      "Loan Documents" means this instrument, that certain that certain
Devonshire Second Open-End Mortgage and Security Agreement (the "Devonshire
Second Lien Instrument") of even date herewith executed by Grantor granting a
lien on certain property (the "Devonshire Property") in the County of Allegheny,
State of Pennsylvania, the Note,

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that certain Commitment for First Loan (the "Commitment") dated of even date
herewith between Gaines Ranch Borrower and Mortgagee, that certain Devonshire
Absolute Assignment of Leases and Rents of even date herewith between Mortgagor
and Mortgagee and that certain Southfield Absolute Assignment of Leases and
Rents of even date herewith between Mortgagor and Mortgagee (collectively the
"Absolute Assignment"), that certain Brookdale Living Communities, Inc.
Certification of even date herewith, that certain Limited Liability Company
Supplement as dated contemporaneously herewith, any other supplements and
authorizations required by Mortgagee) and any other agreement entered into or
document executed by Mortgagor and delivered to Mortgagee in connection with the
indebtedness evidenced by the Note, except for that certain Environmental
Indemnity Agreement of even date herewith given by Brookdale Living Communities,
Inc., a Delaware corporation, ("Principal") to Mortgagee (the "Environmental
Indemnity Agreement"), as any of the foregoing may be amended from time to time.

      TO PROTECT THE SECURITY OF THIS MORTGAGE, MORTGAGOR COVENANTS AND AGREES:

PAYMENT OF DEBT. Mortgagor agrees to pay the indebtedness hereby secured (the
"Indebtedness") promptly and in full compliance with the terms of the Loan
Documents.

OWNERSHIP. Mortgagor represents that it owns the Property and has good and
lawful right to convey the same and that the Property is free and clear from any
and all encumbrances whatsoever, except as appears in the title insurance policy
received by Mortgagee. Mortgagor does hereby forever warrant and shall forever
defend the title and possession thereof against the lawful claims of any and all
persons whomsoever.

MAINTENANCE OF PROPERTY AND COMPLIANCE WITH LAWS. Mortgagor agrees to keep the
buildings and other improvements now or hereafter erected on the Land in good
condition and repair, reasonable wear and tear excepted; not to commit or suffer
any waste; to comply with all laws, rules and regulations affecting the
Property; and to permit Mortgagee to enter at all reasonable times for the
purpose of inspection and of conducting, in a reasonable and proper manner, such
tests as Mortgagee determines to be necessary in order to monitor Mortgagor's
compliance with applicable laws and regulations regarding hazardous materials
affecting the Property.

USING CHLORINATED SOLVENTS. Mortgagor agrees not to lease any of the Property,
without the prior written consent of Mortgagee, to (i) dry cleaning operations
that perform dry cleaning on site with chlorinated solvents or (ii) any other
tenants that use chlorinated solvents in the operation of their businesses, and
Mortgagor covenants that it shall not use or store chlorinated solvents at the
Property.

BUSINESS RESTRICTION REPRESENTATION AND WARRANTY. Mortgagor represents and
warrants that Principal, Mortgagor, all persons and entities directly owning an
ownership interest in Principal and all persons and entities directly or
indirectly owning an ownership

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interest in Mortgagor (except for any person or entity indirectly owning an
ownership interest in Principal), all guarantors of all or any portion of the
Indebtedness, and all persons and entities executing any separate indemnity
agreement in favor of Mortgagee in connection with the Indebtedness, and, to the
best of the knowledge of Mortgagor, all persons and entities indirectly owning
an ownership interest in Principal: (i) are not, and shall not become, a person
or entity with whom Mortgagee is restricted from doing business with under
regulations of the Office of Foreign Asset Control ("OFAC") of the Department of
the Treasury (including, but not limited to, those named on OFAC's Specially
Designated and Blocked Persons list) or under any statute, executive order
(including, but not limited to, the September 24, 2001 Executive Order Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism), or other governmental action; (ii) are not
knowingly engaged in, and shall not engage in, any dealings or transaction or be
otherwise associated with such persons or entities described in (i) above; and
(iii) are not, and shall not become, a person or entity whose activities are
regulated by the International Money Laundering Abatement and Financial
Anti-Terrorism Act of 2001 or the regulations or orders thereunder.

INSURANCE. Mortgagor agrees to keep the Property insured for the protection of
Mortgagee and Mortgagee's wholly owned subsidiaries and agents in such manner,
in such amounts and in such companies as Mortgagee may from time to time
approve, and to keep the policies therefor, properly endorsed, on deposit with
Mortgagee, or at Mortgagee's option, to keep certificates of insurance (Acord 27
for all property insurance and Acord 25-S for all liability insurance)
evidencing all insurance coverages required hereunder on deposit with Mortgagee,
which certificates shall provide at least thirty (30) days notice of
cancellation to Mortgagee and shall list Mortgagee as the certificate holder;
that insurance loss proceeds from all property insurance policies, whether or
not required by Mortgagee (less expenses of collection) shall, at Mortgagee's
option, be applied on the Indebtedness, whether due or not, or to the
restoration of the Property, or be released to Mortgagor, but such application
or release shall not cure or waive any default under any of the Loan Documents.
If Mortgagee elects to apply the insurance loss proceeds on the Indebtedness, no
prepayment privilege fee shall be due thereon.

      Notwithstanding the foregoing provision, Mortgagee agrees that if the
insurance loss proceeds are less than the unpaid principal balance of the Note
and if the casualty occurs prior to the last year of the term of the Note, then
the insurance loss proceeds (less expenses of collection) shall be applied to
restoration of the Property to its condition prior to the casualty, subject to
satisfaction of the following conditions:

      (a)   There is no existing Event of Default at the time of casualty, and
            if there shall occur any Event of Default after the date of the
            casualty, Mortgagee shall have no further obligation to release
            insurance loss proceeds hereunder during the continuation thereof.

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      (b)   The casualty insurer has not denied liability for payment of
            insurance loss proceeds as a result of any act, neglect, use or
            occupancy of the Property by Mortgagor.

      (c)   Mortgagee shall be reasonably satisfied that all insurance loss
            proceeds so held, together with supplemental funds to be made
            available by Mortgagor, shall be sufficient to complete the
            restoration of the Property. Any remaining insurance loss proceeds
            may, at the option of Mortgagee, be applied on the Indebtedness,
            without a prepayment fee, whether or not due, or be released to
            Mortgagor.

      (d)   If required by Mortgagee, Mortgagee shall be furnished a
            satisfactory report addressed to Mortgagee from an environmental
            engineer or other qualified professional satisfactory to Mortgagee
            to the effect that no adverse environmental impact to the Property
            resulted from the casualty.

      (e)   Mortgagee shall release casualty insurance proceeds as restoration
            of the Property progresses provided that Mortgagee is furnished
            satisfactory evidence of the costs of restoration and if, at the
            time of such release, there shall exist no Monetary Default (as
            hereinafter defined) and no default with respect to which Mortgagee
            shall have given Mortgagor notice pursuant to the NOTICE OF DEFAULT
            provision herein. If the estimated cost of restoration exceeds
            $250,000.00, (i) the drawings and specifications for the restoration
            shall be approved by Mortgagee in writing prior to commencement of
            the restoration, and (ii) Mortgagee shall receive an administration
            fee equal to 1% of the cost of restoration.

      (f)   Prior to each release of funds, Mortgagor shall obtain for the
            benefit of Mortgagee an endorsement to Mortgagee's title insurance
            policy insuring Mortgagee's lien as a first and valid lien on the
            Property subject only to liens and encumbrances theretofore approved
            by Mortgagee.

      (g)   Mortgagor shall pay all costs and expenses incurred by Mortgagee,
            including, but not limited to, reasonable outside legal fees, title
            insurance costs, third-party disbursement fees, third-party
            engineering reports and inspections deemed necessary by Mortgagee in
            its reasonable discretion.

      (h)   All reciprocal easement and operating agreements benefiting the
            Property, if any, shall remain in full force and effect between the
            parties thereto on and after restoration of the Property.

      (i)   Mortgagee shall be satisfied that Projected Debt Service Coverage of
            at least 1.10 will be produced from the leasing of not more than 185
            units in the Property to former residents or approved new residents
            with leases

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            satisfactory to Mortgagee for terms of at least one year to commence
            not later than (30) days following completion of such restoration
            ("Approved Leases").

      "Projected Debt Service Coverage" means a number calculated by dividing
Projected Operating Income Available for Debt Service for the first fiscal year
following restoration of the Property by the debt service during the same fiscal
year under all indebtedness secured by any portion of the Property. For purposes
of the preceding sentence, "debt service" means the greater of (x) debt service
due under all such indebtedness during the first fiscal year following
completion of the restoration of the Property or (y) debt service that would be
due and payable during such fiscal year if all such indebtedness were amortized
over 25 years (whether or not amortization is actually required) and if interest
on such indebtedness were due as it accrues at the face rate shown on the notes
therefore (whether or not interest payments based on such face rates are
required).

      "Projected Operating Income Available for Debt Service" means projected
gross annual rent from the Approved Leases for the first full fiscal year
following completion of the restoration of the Property less:

(A)   The operating expenses of the Property for the last fiscal year preceding
      the casualty and

(B)   the following:

      (i)   a replacement reserve for capital improvements, unit remodels and
            structural items based on not less than $350 per unit per annum;

      (ii)  the amount, if any, by which actual gross income during such fiscal
            period exceeds that which would be earned from the rental of 92% of
            the units at the Property;

      (iii) the amount, if any, by which the actual management fee is less than
            5% of effective gross revenue during such fiscal period;

      (iv)  the amount, if any, by which the actual real estate taxes are less
            than $2,233 per unit per annum; and

      (v)   the amount, if any, by which total actual operating expenses,
            excluding management fees, real estate taxes and replacement
            reserves, are less than $13,607 per unit per annum.

      All projections referenced above shall be calculated in a manner
satisfactory to Mortgagee in its reasonable discretion.

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CONDEMNATION. Mortgagor hereby assigns to Mortgagee (i) any award and any other
proceeds resulting from damage to, or the taking of, all or any portion of the
Property, and (ii) the proceeds from any sale or transfer in lieu thereof
(collectively, "Condemnation Proceeds") in connection with condemnation
proceedings or the exercise of any power of eminent domain or the threat thereof
(hereinafter, a "Taking"); any Condemnation Proceeds shall, at Mortgagee's
option, be applied on the Indebtedness, whether due or not, or to the
restoration of the Property, or be released to Mortgagor, but such application
or release shall not cure or waive any default under any of the Loan Documents.
Any portion of such award and proceeds not applied to restoration shall, at
Mortgagee's option, be applied on the Indebtedness, whether due or not, or be
released to Mortgagor, but such application or release shall not cure or waive
any default under any of the Loan Documents. Notwithstanding the foregoing, if
the Condemnation Proceeds are less than the unpaid principal balance of the Note
and such damage or Taking occurs prior to the last year of the term of the Note,
such Condemnation Proceeds (less expenses of collection) shall be applied to
restoration of the Property to its condition, or the functional equivalent of
its condition prior to the Taking, provided that restoration or replacement of
the improvements on the Land to their functional and economic utility prior to
the Taking be possible, and provided that the following conditions are
satisfied:

      (a)   There is no existing Event of Default at the time of the Taking, and
            if there shall occur any Event of Default after the date of the
            Taking, Mortgagee shall have no further obligation to release
            Condemnation Proceeds hereunder.

      (b)   Mortgagee shall be reasonably satisfied that all Condemnation
            Proceeds so held, together with supplemental funds to be made
            available by Mortgagor, shall be sufficient to complete the
            restoration of the Property. Any remaining Condemnation Proceeds
            may, at the option of Mortgagee, be applied on the Indebtedness,
            whether or not due, or be released to Mortgagor.

      (c)   If reasonably required by Mortgagee, Mortgagee shall be furnished a
            satisfactory report addressed to Mortgagee from an environmental
            engineer or other qualified professional satisfactory to Mortgagee
            to the effect that no adverse environmental impact to the Property
            resulted from the Taking.

      (d)   Mortgagee shall release Condemnation Proceeds as restoration of the
            Property progresses provided that Mortgagee is furnished
            satisfactory evidence of the costs of restoration and if, at the
            time of such release, there shall exist no Monetary Default (as
            hereinafter defined) and no default with respect to which Mortgagee
            shall have given Mortgagor notice pursuant to the NOTICE OF DEFAULT
            provision herein. If the estimated cost of restoration exceeds
            $250,000.00, (i) the drawings and specifications for the restoration

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            shall be approved by Mortgagee in writing prior to commencement of
            the restoration, and (ii) Mortgagee shall receive an administration
            fee equal to 1% of the cost of restoration.

      (e)   Prior to each release of funds, Mortgagor shall obtain for the
            benefit of Mortgagee an endorsement to Mortgagee's title insurance
            policy insuring Mortgagee's lien as a first and valid lien on the
            Property subject only to liens and encumbrances theretofore approved
            by Mortgagee.

      (f)   Mortgagor shall pay all costs and expenses incurred by Mortgagee,
            including, but not limited to, outside legal fees, title insurance
            costs, third-party disbursement fees, third-party engineering
            reports and inspections deemed necessary by Mortgagee in its
            reasonable discretion.

      (g)   All reciprocal easement and operating agreements benefiting the
            Property, if any, shall remain in full force and effect between the
            parties thereto on and after restoration of the Property.

      (h)   Mortgagee shall be satisfied that Projected Debt Service Coverage of
            at least 1.10 will be produced from the leasing of not more than 185
            units to former residents or approved new residents with leases
            satisfactory to Mortgagee for terms of at least one year to commence
            not later than thirty (30) days following completion of such
            restoration ("Approved Leases").

TAXES AND SPECIAL ASSESSMENTS. Mortgagor agrees to pay before delinquency all
taxes and special assessments of any kind that have been or may be levied or
assessed against the Property, this instrument, the Note or the Indebtedness, or
upon the interest of Mortgagee in the Property, this instrument, the Note or the
Indebtedness, and to procure and deliver to Mortgagee within 30 days after
Mortgagee shall have given a written request to Mortgagor, the official receipt
of the proper officer showing timely payment of all such taxes and assessments;
provided, however, that Mortgagor shall not be required to pay any such taxes or
special assessments if the amount, applicability or validity thereof shall
currently be contested in good faith by appropriate proceedings and funds
sufficient to satisfy the contested amount have been deposited in an escrow
satisfactory to Mortgagee.

PERSONAL PROPERTY. With respect to the Personal Property, Mortgagor hereby
represents, warrants and covenants as follows:

      (a) Except for the security interest granted hereby, Mortgagor is, and as
to portions of the Personal Property to be acquired after the date hereof will
be, the sole owner of the Personal Property, free from any lien, security
interest, encumbrance or adverse claim thereon of any kind whatsoever, except as
otherwise permitted herein. Mortgagor shall notify Mortgagee of, and shall
indemnify and defend Mortgagee and the Personal Property

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against, all claims and demands of all persons at any time claiming the Personal
Property or any part thereof or any interest therein.

      (b) Except as otherwise provided above, Mortgagor shall not lease, sell,
convey or in any manner transfer the Personal Property without the prior consent
of Mortgagee.

      (c) Until the Indebtedness is paid in full, Mortgagor (i) shall not change
its legal name without providing Mortgagee with thirty (30) days prior written
notice; and (ii) shall not change its state of organization and (iii) shall
preserve its existence and shall not, in one transaction or a series of
transactions, merge into or consolidate with any other entity.

      (d) At the request of Mortgagee, Mortgagor shall join Mortgagee in
executing one or more financing statements and continuations and amendments
thereof pursuant to the Uniform Commercial Code in form satisfactory to
Mortgagee, and Mortgagor shall pay the cost of filing the same in all public
offices wherever filing is deemed by Mortgagee to be necessary or desirable.
Mortgagor shall also, at Mortgagor's expense, take any and all other action
requested by Mortgagee to perfect Mortgagee's security interest under the
Uniform Commercial Code with respect to the Personal Property, including,
without limitation, exercising Mortgagor's commercially reasonable efforts to
obtain any consents, agreements or acknowledgments required of third parties to
perfect Mortgagee's security interest in Personal Property consisting of deposit
accounts, letter-of-credit rights, investment property, and electronic chattel
paper.

OTHER LIENS. Mortgagor agrees to keep the Property or any Personal Property free
from all other liens either prior or subsequent to the lien created by this
instrument except for that certain Devonshire Second Open-End Mortgage and
Security Agreement of even date herewith executed by Mortgagor, and any trade
debt shown on Exhibit B attached hereto. The (i) creation of any other lien on
any portion of the Property or on any Personal Property, whether or not prior to
the lien created hereby, (ii) assignment or pledge by Mortgagor of its revocable
license to collect, use and enjoy rents and profits from the Property, or (iii)
granting or permitting of a security interest in or other encumbrance on the
ownership interests in Mortgagor, shall constitute a default under the terms of
this instrument; except that upon written notice to Mortgagee, Mortgagor may,
after the Loan Closing Date (as defined in the Commitment), proceed to contest
in good faith and by appropriate proceedings any mechanics liens, tax liens or
judgment liens with respect to the Property or any Personal Property described
herein, provided funds sufficient to satisfy the contested amount have been
deposited in an escrow account satisfactory to Mortgagee.

COSTS, FEES AND EXPENSES. Mortgagor agrees to appear in and defend any action or
proceeding purporting to affect the security hereof or the rights or powers of
Mortgagee hereunder; to pay all costs and expenses, including the cost of
obtaining evidence of title and reasonable attorney's fees, incurred in
connection with any such action or proceeding; and to pay any and all attorney's
fees and expenses of collection and enforcement in the

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event the Note is placed in the hands of an attorney for collection, enforcement
of any of the Loan Documents is undertaken or suit is brought thereon.

FAILURE OF MORTGAGOR TO ACT. If Mortgagor fails to make any payment or do any
act as herein provided, Mortgagee may, without obligation so to do, without
notice to or demand upon Mortgagor and without releasing Mortgagor from any
obligation hereof: (i) make or do the same in such manner and to such extent as
Mortgagee may deem necessary to protect the security hereof, Mortgagee being
authorized to enter upon the Property for such purpose; (ii) appear in and
defend any action or proceeding purporting to affect the security hereof, or the
rights or powers of Mortgagee; (iii) pay, purchase, contest or compromise any
encumbrance, charge or lien which in the judgment of Mortgagee appears to be
prior or superior hereto; and (iv) in exercising any such powers, pay necessary
expenses, employ counsel and pay its reasonable fees. Sums so expended shall be
payable by Mortgagor immediately upon demand with interest from date of
expenditure at the Default Rate (as defined in the Note). All sums so expended
by Mortgagee and the interest thereon shall be included in the Indebtedness and
secured by the lien of this instrument.

EVENT OF DEFAULT. Any default by Mortgagor in making any required payment of the
Indebtedness or any default in any provision, covenant, agreement, warranty or
certification contained in any of the Loan Documents shall, except as provided
in the two immediately succeeding paragraphs, constitute an "Event of Default".

NOTICE OF DEFAULT. A default in any payment required in the Note or any other
Loan Document, whether or not payable to Mortgagee, (a "Monetary Default") shall
not constitute an Event of Default unless Mortgagee shall have given a written
notice of such Monetary Default to Mortgagor and Mortgagor shall not have cured
such Monetary Default by payment of all amounts in default (including payment of
interest at the Default Rate, as defined in the Note, from the date of default
to the date of cure on amounts owed to Mortgagee) within five (5) business days
after the date on which Mortgagee shall have given such notice to Mortgagor.

      Any other default under the Note or under any other Loan Document (a
"Non-Monetary Default") shall not constitute an Event of Default unless
Mortgagee shall have given a written notice of such Non-Monetary Default to
Mortgagor and Mortgagor shall not have cured such Non-Monetary Default within
thirty (30) days after the date on which Mortgagee shall have given such notice
of default to Mortgagor (or, if the Non-Monetary Default is not curable within
such 30-day period, Mortgagor shall not have diligently undertaken and continued
to pursue the curing of such Non-Monetary Default and deposited an amount
sufficient to cure such Non-Monetary Default in an escrow account satisfactory
to Mortgagee).

      In no event shall the notice and cure period provisions recited above
constitute a grace period for the purposes of commencing interest at the Default
Rate (as defined in the Note).

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APPOINTMENT OF RECEIVER. Upon commencement of any proceeding to enforce any
right under this instrument, including foreclosure thereof, Mortgagee (without
limitation or restriction by any present or future law, without regard to the
solvency or insolvency at that time of any party liable for the payment of the
Indebtedness, without regard to the then value of the Property, whether or not
there exists a threat of imminent harm, waste or loss to the Property and or
whether the same shall then be occupied by the owner of the equity of redemption
as a homestead) shall have the absolute right to the appointment of a receiver
of the Property and of the revenues, rents, profits and other income therefrom,
and said receiver shall have (in addition to such other powers as the court
making such appointment may confer) full power to collect all such income and,
after paying all necessary expenses of such receivership and of operation,
maintenance and repair of said Property, to apply the balance to the payment of
any of the Indebtedness then due.

FORECLOSURE. Upon the occurrence of an Event of Default, the entire unpaid
Indebtedness shall, at the option of Mortgagee (to be exercised at any time that
said Event of Default continues to exist), become immediately due and payable
for all purposes without any notice or demand, except as required by law (ALL
OTHER NOTICE OF THE EXERCISE OF SUCH OPTION, OR OF THE INTENT TO EXERCISE SUCH
OPTION, BEING HEREBY EXPRESSLY WAIVED), and Mortgagee may, in addition to
exercising any rights it may have with respect to the Personal Property under
the Uniform Commercial Code of the jurisdiction in which the Property is
located, institute proceedings in any court of competent jurisdiction to
foreclose this instrument as a mortgage, or to enforce any of the covenants
hereof, or Mortgagee may, either personally or by agent or attorney in fact,
enter upon and take possession of the Property and may manage, rent or lease the
Property or any portion thereof upon such terms as Mortgagee may deem expedient,
and collect, receive and receipt for all rentals and other income therefrom and
apply the sums so received as hereinafter provided in case of sale. Mortgagee is
hereby further authorized and empowered, as agent or attorney in fact, either
after or without such entry, to sell and dispose of the Property en masse or in
separate parcels (as Mortgagee may think best), and all the right, title and
interest of Mortgagor therein, by advertisement or in any manner provided by the
laws of the jurisdiction in which the Property is located (MORTGAGOR HEREBY
EXPRESSLY WAIVES ANY RIGHT TO A HEARING PRIOR TO SUCH SALE), and to issue,
execute and deliver a deed of conveyance, all as then may be provided by law;
and Mortgagee shall, out of the proceeds or avails of such sale, after first
paying and retaining all fees, charges, costs of advertising the Property and of
making said sale, and attorneys' fees as herein provided, apply such proceeds to
the Indebtedness, including all sums advanced or expended by Mortgagee or the
legal holder of the Indebtedness, with interest from date of advance or
expenditure at the Default Rate (as defined in the Note), rendering the excess,
if any, as provided by law; such sale or sales and said deed or deeds so made
shall be a perpetual bar, both in law and equity, against Mortgagor, the heirs,
successors and assigns of Mortgagor, and all other persons claiming the Property
aforesaid, or any part thereof, by, from, through or under Mortgagor. The legal
holder of the

                                       12
<PAGE>

Indebtedness may purchase the Property or any part thereof, and it shall not be
obligatory upon any purchaser at any such sale to see to the application of the
purchase money.

CROSS-DEFAULT; ANTIMARSHALLING. In the event there shall be a default under that
certain Gaines Ranch First Mortgage and Security Agreement (the "Gaines Ranch
First Lien Instrument") of even date herewith executed by Gaines Ranch Borrower
and granting a third lien on certain property in the County of Travis, State of
Texas (the "Gaines Ranch Property") to Mortgagee, such default shall constitute
a default under this instrument and Mortgagee, at its option after such default
becomes an Event of Default, may declare the Indebtedness due and collectible at
once, and may exercise or cause to be exercised, all of its rights and remedies
under this instrument and the Gaines Ranch First Lien Instrument concurrently or
separately and in such order as Mortgagee may determine.

In the event there shall be any Event of Default under this instrument,
Mortgagee may institute (i) a joint proceeding with respect to this instrument,
the Devonshire Second Lien Instrument, and the Gaines Ranch First Lien
Instrument or (ii) separate proceedings with respect to each lien instrument.
Said separate proceedings may be instituted simultaneously or in such order and
at such times as Mortgagee may elect and no such election shall waive any right
of Mortgagee to subsequently enforce any such lien instrument in the same or any
other proceedings. The pendency of any proceedings with respect to any lien
instrument shall not be grounds for the abatement or for hindering, delaying or
preventing any proceedings with respect to any other lien instrument. An Event
of Default under each lien instrument shall constitute a separate cause of
action, and the institution of proceedings upon one or two, but not all three,
shall not be construed as a splitting or waiver of a cause by Mortgagee.
Mortgagor, on behalf of itself and any transferee of the Property, hereby waives
any right which it may have to require Mortgagee, and Mortgagee shall not be
required, to marshall assets or to proceed against any one property secured by
said lien instruments prior to or contemporaneously with proceeding against any
other property secured by said lien instruments, or to proceed against the
property upon which a lien is placed by any one lien instrument prior to or
contemporaneously with proceeding against a property upon which a lien is placed
by any other lien instrument.

Mortgagor acknowledges and agrees that (a) the foregoing cross default
provisions are a material part of the consideration given to Mortgagee as an
inducement to make the loans evidenced by the Note and that certain Promissory
Note of even date herewith executed by Mortgagor in favor of Mortgagee, (b)
Mortgagor and the Gaines Ranch Borrower are affiliates and each has received
valuable consideration as a result of Mortgagee agreeing to make said loans, and
(c) the structure of said loans including multiple notes and mortgages and the
cross default provisions are agreed to by Mortgagor as an inducement to
Mortgagee to make the loans at the amounts and the interest rate provided
therein.

PROHIBITION ON TRANSFER. The present ownership and management of the Property is
a material consideration to Mortgagee in making the loan secured by this
instrument, and Mortgagor shall not (i) convey title to all or any part of the
Property, (ii) enter into any

                                       13
<PAGE>

contract to convey (land contract/installment sales contract/contract for deed)
title to all or any part of the Property which gives a purchaser possession of,
or income from, the Property prior to a transfer of title to all or any part of
the Property ("Contract to Convey") or (iii) cause or permit a Change in the
Proportionate Ownership (as hereinafter defined) of Mortgagor. Any such
conveyance, entering into a Contract to Convey or Change in the Proportionate
Ownership of Mortgagor shall constitute a default under the terms of this
instrument.

      For purposes of this instrument, a "Change in the Proportionate Ownership"
means in the case of a corporation, a change in, or the existence of a lien on,
the ownership of the voting stock of such corporation; in the case of a trust, a
change in, or the existence of a lien on, the beneficial ownership of such
trust; in the case of a limited liability company, a change in the ownership of,
or the existence of a lien on, the limited liability company interests of such
limited liability company; in the case of a partnership, a change in the
ownership of, or the existence of a lien on, the partnership interests of such
partnership.

The continuing ownership and influence of Principal, AH Michigan Owner Limited
Partnership, an Ohio limited partnership, ("AHMI") and AH Pennsylvania Limited
Partnership, an Ohio limited partnership, ("AHPA") is an important factor to
Mortgagee. Accordingly, notwithstanding the above, a transfer of ownership
interests in both AHMI and AHPA shall be permitted only if the following is true
immediately after such transfer: (a) Principal continues to own, directly or
indirectly, free and clear of any security interest, a 100% interest in both
AHMI and AHPA; and (b) Principal has a controlling interest in both AHMI and
AHPA; provided that if at any time thereafter (a) and (B) above do not continue
to be true, a change in the proportionate ownership of Mortgagor shall be deemed
to have taken place in violation of this provision. For purposes hereof, the
"controlling interest" shall mean the possession by any person, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of another entity, whether through ownership interest, by contract or
otherwise.

FINANCIAL STATEMENTS. Mortgagor agrees to furnish to Mortgagee:

(A) the following financial statements for the Property within 90 days after the
close of each fiscal year of the Mortgagor (the "Property Financial Statements
Due Date"):

      (i)   an audited balance sheet as of the last day of such fiscal year; and

      (ii)  an audited statement of operations for such fiscal year with a
            detailed line item break-down of all sources of income and expenses,
            including capital expenses broken down between leasing commissions,
            tenant improvements, capital maintenance, common area renovation,
            and expansion; and if the audited statement is not detailed, an
            unaudited statement with sufficient detail will also be required;
            and

                                       14
<PAGE>

      (iii) a current rent roll identifying location, leased area, lease begin
            and end dates, current contract rent, rent increases and increase
            dates, percentage rent, expense reimbursements, and any other
            recovery items; and

      (iv)  a sales report for such fiscal year identifying monthly and yearly
            sales by all tenants required under their leases to report sales;
            and

      (v)   an operating budget for the current fiscal year; and

      (vi)  an audited statement of cash flows for such fiscal year; and

(B) the following financial statements for Principal within 90 days after the
close of each fiscal year of Principal (the "Principal Financial Statements Due
Date")

      (i)   an audited balance sheet as of the last day of such fiscal year; and

      (ii)  an audited statement of cash flows for such fiscal year.

      The Property Financial Statements Due Date, and the Principal Financial
Statements Due Date are each sometimes hereinafter referred to as a "Financial
Statements Due Date".

      The financial statements identified in sections (A)(i), (A)(ii), (B)(i)
and (B)(ii) above shall each be prepared in accordance with generally accepted
accounting principles by Ernst & Young LLP. All unaudited statements shall
contain a certification by a senior officer of the general partner of AHMI
stating that they have been prepared in accordance with generally accepted
accounting principles and that they are true and correct. The expense of
preparing all of the financial statements required in (A) and (B) above shall be
borne by Mortgagor.

      Mortgagor acknowledges that Mortgagee requires the financial statements to
record accurately the value of the Property for financial and regulatory
reporting.

      In addition to all other remedies available to Mortgagee hereunder, at law
and in equity, if any financial statement or proof of payment of property taxes
and assessments is not furnished to Mortgagee as required in this section
entitled "FINANCIAL STATEMENTS" and in the section entitled "TAXES AND SPECIAL
ASSESSMENTS", within 30 days after Mortgagee shall have given written notice to
Mortgagor that it has not been received as required,

      (x) interest on the unpaid principal balance of the Indebtedness shall as
      of the applicable Financial Statements Due Date or the date such proof of
      payment of property taxes and assessments was due, accrue and become
      payable at a rate equal to the sum of the Interest Rate (as defined in the
      Note) plus one percent (1%) per annum (the "Increased Rate"); and

                                       15
<PAGE>

      (y) Mortgagee may elect to obtain an independent appraisal and audit of
      the Property at Mortgagor's expense, and Mortgagor agrees that it will,
      upon request, promptly make Mortgagor's books and records regarding the
      Property available to Mortgagee and the person(s) performing the appraisal
      and audit (which obligation Mortgagor agrees can be specifically enforced
      by Mortgagee).

      The amount of the payments due under the Note during the time in which the
Increased Rate shall be in effect shall be increased to reflect the higher
interest rate. Interest shall continue to accrue and be due and payable monthly
at the Increased Rate until the financial statements and proof of payment of
property taxes and assessments (as requested by Mortgagee) shall be furnished to
Mortgagee as required. Commencing on the date on which the financial statements
and proof of payment of property taxes and assessments are received by
Mortgagee, interest on the unpaid principal balance shall again accrue at the
Interest Rate and the payments due during the remainder of the term of the Note
shall be reduced to reflect the lower interest rate. Notwithstanding the
foregoing, Mortgagee shall have the right to conduct an independent audit at its
own expense at any time.

PROPERTY MANAGEMENT. The management company shall be satisfactory to Mortgagee
during the term of the Note. Mortgagee hereby acknowledges that Brookdale Living
Communities of Michigan, Inc. shall be deemed satisfactory to Mortgagee. The
Management and Operating Agreement for the Property shall be satisfactory to
Mortgagee. The termination of, or a material modification to, the Management and
Operating Agreement for the Property without Mortgagee's prior written consent
shall be a default under this instrument.

RIGHT OF FIRST REFUSAL FOR FUTURE FINANCING INVOLVING THE PROPERTY. Mortgagee
shall have the right of first refusal for any future mortgage loan,
purchase/lease or other financing transaction involving the Property, and to be
obtained by or for the benefit of Mortgagor or any person or entity controlled
by, related to or associated with Mortgagor.

      In the event Mortgagor submits to Mortgagee a proposal seeking financing
together with sufficient documentation (of the type customarily provided to
financial institutions in such circumstances) to permit evaluation and
underwriting, the proposal shall be submitted to Mortgagee at its Chicago Real
Estate Investment Office at least thirty (30) days prior to the date on which
Mortgagee must elect to offer or refuse to offer the financing requested.

      In the event Mortgagor submits to Mortgagee a copy of a bona fide offer of
financing from another lending institution which describes (a) the loan amount,
(b) term, (c) security, (d) interest rate, (e) frequency of payments, (f)
prepayment terms and (g) loan fees, together with sufficient information about
the proposed development to permit evaluation and underwriting, the proposal
shall be submitted to Mortgagee at its Chicago Real Estate Investment Office at
least thirty (30) days prior to the date on which Mortgagee must elect to offer
or refuse to offer the financing requested.

                                       16
<PAGE>

      If Mortgagor accepts any financing, Mortgagor agrees to accept any
financing offered by Mortgagee pursuant to its right of first refusal provided
that Mortgagee's financing offered is on competitive terms with commitments or
offers received from other sources for the same financing. Mortgagee's refusal
to offer the financing requested shall not be deemed to be a waiver by Mortgagee
of its right of first refusal or to finance the same Property if Mortgagor is
unsuccessful in procuring from another source that financing which was
previously offered to and refused by Mortgagee. Regardless of whether a bona
fide offer brought to Mortgagee for financing involves just one of the Property,
the Gaines Ranch Property, or the Devonshire Property, a combination of two of
them, or all three of them, Mortgagee's right of first refusal shall only be
with respect to the particular combination or property involved in the offer
brought to it by Mortgagor, and Mortgagee shall not have a right of first
refusal for a different combination or a different property.

DEPOSITS BY MORTGAGOR. To assure the timely payment of real estate taxes and
special assessments (including personal property taxes, if appropriate), upon
the occurrence of an Event of Default, Mortgagee shall thence forth have the
option to require Mortgagor to deposit funds with Mortgagee, in monthly or other
periodic installments in amounts reasonably estimated by Mortgagee from time to
time sufficient to pay real estate taxes and special assessments as they become
due. If at any time the funds so held by Mortgagee shall be insufficient to pay
any of said expenses, Mortgagor shall, upon receipt of notice thereof,
immediately deposit such additional funds as may be necessary to remove the
deficiency. All funds so deposited shall be irrevocably appropriated to
Mortgagee to be applied to the payment of such real estate taxes and special
assessments and, at the option of Mortgagee after default, the Indebtedness.

NOTICES. Any notices, demands, requests and consents permitted or required
hereunder or under any other Loan Document shall be in writing, may be delivered
personally or sent by certified mail with postage prepaid or by reputable
courier service with charges prepaid. Any notice or demand sent to Mortgagor by
certified mail or reputable courier service shall be addressed to Mortgagor c/o
Brookdale Living Communities, Inc., Attn: R. Stanley Young, 330 N. Wabash
Avenue, Suite 1400, Chicago, IL, 60611 with a copy to c/o Brookdale Living
Communities, Inc., Attn: Deborah Paskin, 330 N. Wabash Avenue, Suite 1400,
Chicago, IL, 60611 or such other address in the United States of America as
Mortgagor shall designate in a notice to Mortgagee given in the manner described
herein. Any notice sent to Mortgagee by certified mail or reputable courier
service shall be addressed to The Northwestern Mutual Life Insurance Company to
the attention of the Real Estate Investment Department at 720 East Wisconsin
Avenue, Milwaukee, WI 53202, or at such other addresses as Mortgagee shall
designate in a notice given in the manner described herein. Any notice given to
Mortgagee shall refer to the Loan No. set forth above. Any notice or demand
hereunder shall be deemed given when received. Any notice or demand which is
rejected, the acceptance of delivery of which is refused or which is incapable
of being delivered during normal business hours at

                                       17
<PAGE>

the address specified herein or such other address designated pursuant hereto
shall be deemed received as of the date of attempted delivery.

MODIFICATION OF TERMS. Without affecting the liability of Mortgagor or any other
person (except any person expressly released in writing) for payment of the
Indebtedness or for performance of any obligation contained herein and without
affecting the rights of Mortgagee with respect to any security not expressly
released in writing, Mortgagee may, at any time and from time to time, either
before or after the maturity of the Note, without notice or consent: (i) release
any person liable for payment of all or any part of the Indebtedness or for
performance of any obligation; (ii) make any agreement extending the time or
otherwise altering the terms of payment of all or any part of the Indebtedness,
or modifying or waiving any obligation, or subordinating, modifying or otherwise
dealing with the lien or charge hereof; (iii) exercise or refrain from
exercising or waive any right Mortgagee may have; (iv) accept additional
security of any kind; (v) release or otherwise deal with any property, real or
personal, securing the Indebtedness, including all or any part of the Property.

EXERCISE OF OPTIONS. Whenever, by the terms of this instrument, of the Note or
any of the other Loan Documents, Mortgagee is given any option, such option may
be exercised when the right accrues or at any time thereafter, and no acceptance
by Mortgagee of payment of Indebtedness in default shall constitute a waiver of
any default then existing and continuing or thereafter occurring.

NATURE AND SUCCESSION OF AGREEMENTS. Each of the provisions, covenants and
agreements contained herein shall inure to the benefit of, and be binding on,
the heirs, executors, administrators, successors, grantees, and assigns of the
parties hereto, respectively, and the term "Mortgagee" shall include the owner
and holder of the Note.

LEGAL ENFORCEABILITY. No provision of this instrument, the Note or any other
Loan Documents shall require the payment of interest or other obligation in
excess of the maximum permitted by law. If any such excess payment is provided
for in any Loan Documents or shall be adjudicated to be so provided, the
provisions of this paragraph shall govern and Mortgagor shall not be obligated
to pay the amount of such interest or other obligation to the extent that it is
in excess of the amount permitted by law.

LIMITATION OF LIABILITY. Notwithstanding any provision contained herein to the
contrary, the personal liability of Mortgagor shall be limited as provided in
the Note.

MISCELLANEOUS. Time is of the essence in each of the Loan Documents. The
remedies of Mortgagee as provided herein or in any other Loan Document or at law
or in equity shall be cumulative and concurrent, and may be pursued singly,
successively, or together at the sole discretion of Mortgagee, and may be
exercised as often as occasion therefor shall occur; and neither the failure to
exercise any such right or remedy nor any acceptance by Mortgagee of payment of
Indebtedness in default shall in any event be construed as a waiver or release
of

                                       18
<PAGE>

any right or remedy. Neither this instrument nor any other Loan Document may be
modified or terminated orally but only by agreement or discharge in writing and
signed by Mortgagor and Mortgagee. If any of the provisions of any Loan Document
or the application thereof to any persons or circumstances shall to any extent
be invalid or unenforceable, the remainder of such Loan Document and each of the
other Loan Documents, and the application of such provision or provisions to
persons or circumstances other than those as to whom or which it is held invalid
or unenforceable, shall not be affected thereby, and every provision of each of
the Loan Documents shall be valid and enforceable to the fullest extent
permitted by law.

WAIVER OF JURY TRIAL. Mortgagor hereby waives any right to trial by jury with
respect to any action or proceeding (a) brought by Mortgagor, Mortgagee or any
other person relating to (i) the obligations secured hereby and/or any
understandings or prior dealings between the parties hereto or (ii) the Loan
Documents or the Environmental Indemnity Agreement, or (b) to which Mortgagee is
a party.

CAPTIONS. The captions contained herein are for convenience and reference only
and in no way define, limit or describe the scope or intent of, or in any way
affect this instrument.

GOVERNING LAW. This instrument, the interpretation hereof and the rights,
obligations, duties and liabilities hereunder shall be governed and controlled
by the laws of the state in which the Property is located.

                                       19
<PAGE>

      IN WITNESS WHEREOF, this instrument has been executed by the Mortgagor as
of the day and year first above written.

                         BROOKDALE SENIOR HOUSING, LLC, a
                         Delaware limited liability company

                         By: AH Michigan Owner Limited Partnership, an
                             Ohio limited partnership,

                             By: AH Michigan CGP, Inc., an Ohio
                                 corporation, its sole general partner

                                 By: /s/ R. Stanley Young
                                    ---------------------------------
                                    R. Stanley Young
                                    Its Vice President

                         By: AH Pennsylvania Owner Limited Partnership, an
                             Ohio limited partnership

                             By: AH Pennsylvania CGP, Inc., an Ohio
                                 corporation, its sole general partner

                                 By: /s/ R. Stanley Young
                                    ---------------------------------
                                    R. Stanley Young
                                    Its Vice President

                         By: The Northwestern Mutual Life Insurance
                             Company, a Wisconsin corporation, a member

                             By: Northwestern Investment
                                 Management Company, LLC, a
                                 Delaware limited liability
                                 company, its wholly-owned
                                 affiliate and authorized
                                 representative

                                 By: /s/ David D. Clark
                                    ---------------------------------
                                    David D. Clark
                                    Its Managing Director

                                 Attest: /s/ Daniel C. Knuth
                                        ------------------------------
                                        Daniel C. Knuth
                                        Its Assistant Secretary

                                       20
<PAGE>

STATE OF ILLINOIS              )
                               )ss.
COUNTY OF COOK                 )

The foregoing instrument was acknowledged before me this 30 day of
September, 2003, by R. Stanley Young, Vice President of AH Michigan CGP,
Inc., an Ohio corporation, the general partner of AH Michigan Owner Limited
Partnership, an Ohio limited partnership, a member of BROOKDALE SENIOR HOUSING,
LLC, a Delaware limited liability company, and acknowledged the execution of the
foregoing instrument as the act and deed of said limited liability company.

                                                  /s/ Cheryl Miller
                                                  -----------------------------
                                                        Notary Public

My commission expires: 5/31/06

STATE OF ILLINOIS              )
                               )ss.
COUNTY OF COOK                 )

The foregoing instrument was acknowledged before me this 30 day of
September, 2003, by R. Stanley Young, Vice President of AH Pennsylvania CGP,
Inc., an Ohio corporation, the general partner of AH Pennsylvania Owner Limited
Partnership, an Ohio limited partnership, a member of BROOKDALE SENIOR HOUSING,
LLC, a Delaware limited liability company, and acknowledged the execution of the
foregoing instrument as the act and deed of said limited liability company.

                                                       /s/ Cheryl Miller
                                                       -------------------------
                                                            Notary Public

My commission expires: 5/31/06

                                       21
<PAGE>

STATE OF WISCONSIN             )
                               )ss.
COUNTY OF MILWAUKEE            )

The foregoing instrument was acknowledged before me this 26th day of September,
2003, by David D. Clark and Daniel C. Knuth, the Managing Director and Assistant
Secretary, respectively, of Northwestern Investment Management Company, LLC, a
Delaware limited liability company, on behalf of The Northwestern Mutual Life
Insurance Company, a Wisconsin corporation, a member of BROOKDALE SENIOR
HOUSING, LLC, a Delaware limited liability company, and acknowledged the
execution of the foregoing instrument as the act and deed of said limited
liability company.

                                               /s/ Janet M. Szukalski
                                               ---------------------------------
                                               Janet M. Szukalski, Notary Public

My commission expires: May 9, 2004

This instrument was prepared by Judith Perkins, Attorney, for The Northwestern
Mutual Life Insurance Company, 720 East Wisconsin Avenue, Milwaukee, WI 53202.

                                       22
<PAGE>

                                   EXHIBIT "A"

                          SOUTHFIELD LEGAL DESCRIPTION:

Parcel 1:

Land in the Southwest 1/4 of Section 17 and the Southeast 1/4 of Section 18,
Town 1 North, Range 10 East, City of Southfield, Oakland County, Michigan,
described as commencing at the Southeast corner of Section 18; thence North 00
degrees 02 minutes 03 seconds West 60.00 feet to the North right of way line of
Eleven Mile Road; thence along said right of way line North 89 degrees 55
minutes 53 seconds East 154.07 feet to the point of beginning; thence due North
225.97 feet; thence due West 130.00 feet; thence North 40 degrees 56 minutes 58
seconds West, 419.76 feet; thence North 49 degrees 03 minutes 02 seconds East
506.23 feet; thence South 40 degrees 56 minutes 58 seconds East, 507.01 feet;
thence South 47 degrees 07 minutes 16 seconds West, 340.52 feet; thence due
South 260.07 feet; thence South 89 degrees 55 minutes 53 seconds West, 60.00
feet to the point of beginning.

Said parcel is also described as:

A parcel of land in the SW 1/4 of Section 17 and the SE 1/4 of Section 18, T1N,
R10E, City of Southfield, Oakland County, Michigan, described as: Commencing at
the SE corner of said Section 18; thence N 00 degrees 02'03" W 60.00 feet to the
North right of way line of Eleven Mile Road; thence N 89 degrees 55'53" E 154.07
along said right of way line to the POINT OF BEGINNING; thence North 225.97
feet; thence West 130.00 feet; thence N 40 degrees 56'58" W 419.76 feet; thence
N 49 degrees 00'51" E 506.31 feet; thence S 40 degrees 55'57" E 506.94 feet;
thence S 47 degrees 03'15" W 340.47 feet; thence South 260.07 feet; thence S 89
degrees 55'53" W 60.00 feet to the Point of Beginning, containing 6.18 acres of
land, more or less.

Parcel 2:

Easements for the benefit of Parcel 1 as created by Reciprocal Easement
Agreement dated October 1, 1997, recorded October 13, 1997 in Liber 17678, page
370 and amended by First Amendment to Reciprocal Easement Agreement recorded in
Liber 18433, page 320 and Second Amendment to Reciprocal Easement Agreement
recorded in Liber 18433, page 335, Oakland County Records.

Tax Parcel No. 24-17-351-016

                                       23
<PAGE>

                                    EXHIBIT B

                   List of Trade Debt for Southfield Property

1.    Motor Vehicle Open-End Business Lease Agreement with Cougar Leasing dated
      June 7, 1999 for $965.68 per month.

2.    Lease with Pitney Bowes dated May 19, 1999 for $168.99 per month.

3.    Leasing arrangement re: fax machine and copy machine.

                                       24<PAGE>

                                                                   Exhibit 10.27

TEXAS
LOAN NO. C-332848
RECORDING REQUESTED BY

WHEN RECORDED MAIL TO

The Northwestern Mutual Life Ins. Co.
720 East Wisconsin Avenue - Rm N16WC
Milwaukee, WI 53202
Attn: Sheila Lawton

                            SPACE ABOVE THIS LINE FOR RECORDER'S USE

             GAINES RANCH FIRST DEED OF TRUST AND SECURITY AGREEMENT

      THIS GAINES RANCH FIRST DEED OF TRUST and SECURITY AGREEMENT is made as of
the 30th day of September, 2003 between AH TEXAS OWNER LIMITED PARTNERSHIP, an
Ohio limited partnership, herein (said Grantor/Trustor, whether one or more in
number) called "Grantor", and HENRY F. LANGE, herein called "Trustee", and THE
NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, a Wisconsin corporation, 720 E.
Wisconsin Avenue, Milwaukee, WI 53202, herein called "Beneficiary":

      WITNESSETH, That Grantor, in consideration of the indebtedness herein
mentioned, does hereby irrevocably bargain, sell, grant, transfer, assign and
convey unto Trustee, in trust, with power of sale and right of entry and
possession, the following property (herein referred to as the "Property"):

      A.    The land in the City of Austin, Travis County, Texas, described in
            Exhibit "A" attached hereto and incorporated herein (the "Land");

      B.    All easements, appurtenances, tenements and hereditaments belonging
            to or benefiting the Land, including but not limited to all waters,
            water rights, water courses, all ways, trees, rights, liberties and
            privileges;

      C.    All improvements to the Land, including, but not limited to, all
            buildings, structures and improvements now existing or hereafter
            erected on the Land; all fixtures and equipment of every description
            belonging to Grantor which are or may be placed or used upon the
            Land or attached to

                                       1

<PAGE>

            the buildings, structures or improvements, including, but not
            limited to, all engines, boilers, elevators and machinery, all
            heating apparatus, electrical equipment, air-conditioning and
            ventilating equipment, water and gas fixtures, all carpeting,
            draperies, ranges, microwave ovens, refrigerators, dishwashers,
            computers, furniture, kitchen equipment, cleaning equipment, laundry
            equipment, automobiles and vans and all easily removable equipment;
            all of which, to the extent permitted by applicable law, shall be
            deemed an accession to the freehold and a part of the realty as
            between the parties hereto; and

      D.    Grantor's interest in all articles of personal property of every
            kind and nature whatsoever, now or hereafter located upon the Land
            or in or on the buildings and improvements and now owned or leased
            or hereafter acquired or leased by Grantor.

      Grantor agrees not to sell, transfer, assign or remove anything described
in B, C and D above now or hereafter located on the Land without prior written
consent from Beneficiary unless (i) such action does not constitute a sale or
removal of any buildings or structures or the sale or transfer of waters or
water rights and (ii) such action results in the substitution or replacement
with similar items of equal value.

Without limiting the foregoing grants, Grantor hereby pledges to Beneficiary,
and grants to Beneficiary a security interest in, all of Grantor's present and
hereafter acquired right, title and interest in and to the Property and any and
all

      E.    cash and other funds now or at any time hereafter deposited by or
            for Grantor on account of tax, special assessment, replacement or
            other reserves required to be maintained pursuant to the Loan
            Documents (as hereinafter defined) with Beneficiary or a third
            party, or otherwise deposited with, or in the possession of,
            Beneficiary pursuant to the Loan Documents; and

      F.    surveys, soils reports, environmental reports, guaranties,
            warranties, architect's contracts, construction contracts, drawings
            and specifications, applications, permits, surety bonds and other
            contracts relating to the acquisition, design, development,
            construction and operation of the Property including, without
            limitation, that certain Management and Operating Agreement by and
            between Grantor and BLC of Texas-II, L.P.; and

                                       2

<PAGE>

      G.    accounts, chattel paper, deposit accounts, instruments, equipment,
            inventory, documents, general intangibles, letter-of-credit rights,
            investment property and all other personal property of Grantor
            (including, without limitation, any and all rights in the property
            name "The Heritage at Gaines Ranch"), and

      H.    present and future rights to condemnation awards, insurance proceeds
            or other proceeds at any time payable to or received by Grantor on
            account of the Property or any of the foregoing personal property.

All personal property hereinabove described is hereinafter referred to as the
"Personal Property".

      If any of the Property is of a nature that a security interest therein can
be perfected under the Uniform Commercial Code, this instrument shall constitute
a security agreement and financing statement if permitted by applicable law and
Grantor authorizes Beneficiary to file a financing statement describing such
Property and, at Beneficiary's request, agrees to join with Beneficiary in the
execution of any financing statements and to execute any other instruments that
may be necessary or desirable, in Beneficiary's determination, for the
perfection or renewal of such security interest under the Uniform Commercial
Code.

      TO HAVE AND TO HOLD the same unto Trustee for the purpose of securing:

      (a) Payment to the order of Beneficiary of the indebtedness evidenced by a
promissory note of even date herewith (and any restatement, extension or renewal
thereof and any amendment thereto) executed by Grantor for the principal sum of
SIXTEEN MILLION FOUR HUNDRED TWENTY-TWO THOUSAND DOLLARS ($16,422,000.00), with
final maturity no later than October 1, 2009 and with interest as therein
expressed (which promissory note, as such instrument may be amended, restated,
renewed and extended, is hereinafter referred to as the "Note"), it being
recognized that the funds may not have been fully advanced as of the date hereof
but may be advanced in the future in accordance with the terms of a written
contract; and

      (b) Payment of all sums that may become due Beneficiary under the
provisions of, and the performance of each agreement of Grantor contained in,
the Loan Documents.

      "Loan Documents" means this instrument, the Note, that certain Commitment
for First Loan dated of even date herewith between Grantor and Beneficiary (the
"Commitment"), that certain Gaines Ranch Absolute Assignment of Leases and Rents
of even date herewith between Grantor and Beneficiary (the "Absolute
Assignment"), that certain Gaines Ranch Brookdale Living Communities, Inc.
Certification of even date

                                       3

<PAGE>

herewith, that certain Limited Partnership Supplement as dated contemporaneously
herewith and any other supplements and authorizations required by Beneficiary
and any other agreement entered into or document executed by Grantor and
delivered to Beneficiary in connection with the indebtedness evidenced by the
Note, except for that certain Gaines Ranch Environmental Indemnity Agreement of
even date herewith given by Brookdale Living Communities, Inc., a Delaware
corporation, ("Principal") and Grantor to Beneficiary (the "Environmental
Indemnity Agreement"), as any of the foregoing may be amended from time to time.

      TO PROTECT THE SECURITY OF THIS DEED OF TRUST, GRANTOR COVENANTS AND
AGREES:

PAYMENT OF DEBT. Grantor agrees to pay the indebtedness hereby secured (the
"Indebtedness") promptly and in full compliance with the terms of the Loan
Documents.

OWNERSHIP. Grantor represents that it owns the Property and has good and lawful
right to convey the same and that the Property is free and clear from any and
all encumbrances whatsoever, except as appears in the title insurance policy
received by Beneficiary. Grantor does hereby forever warrant and shall forever
defend the title and possession thereof against the lawful claims of any and all
persons whomsoever.

MAINTENANCE OF PROPERTY AND COMPLIANCE WITH LAWS. Grantor agrees to keep the
buildings and other improvements now or hereafter erected on the Land in good
condition and repair, reasonable wear and tear excepted; not to commit or suffer
any waste; to comply with all laws, rules and regulations affecting the
Property; and to permit Beneficiary to enter at all reasonable times for the
purpose of inspection and of conducting, in a reasonable and proper manner, such
tests as Beneficiary determines to be necessary in order to monitor Grantor's
compliance with applicable laws and regulations regarding hazardous materials
affecting the Property.

USING CHLORINATED SOLVENTS. Grantor agrees not to lease any of the Property,
without the prior written consent of Beneficiary, to (i) dry cleaning operations
that perform dry cleaning on site with chlorinated solvents or (ii) any other
tenants that use chlorinated solvents in the operation of their businesses, and
Grantor covenants that it shall not use or store chlorinated solvents at the
Property.

BUSINESS RESTRICTION REPRESENTATION AND WARRANTY. Grantor represents and
warrants that Principal, Grantor, all persons and entities directly owning an
ownership interest in Principal and all persons and entities directly or
indirectly owning an ownership interest in Grantor (except for any person or
entity indirectly owning an ownership interest in Principal), all guarantors of
all or any portion of the Indebtedness, and all persons and entities executing
any separate indemnity agreement in favor of Beneficiary in connection with the
Indebtedness, and, to the best of the knowledge of Grantor, all

                                       4

<PAGE>

persons and entities indirectly owning an ownership interest in Principal: (i)
are not, and shall not become, a person or entity with whom Beneficiary is
restricted from doing business with under regulations of the Office of Foreign
Asset Control ("OFAC") of the Department of the Treasury (including, but not
limited to, those named on OFAC's Specially Designated and Blocked Persons list)
or under any statute, executive order (including, but not limited to, the
September 24, 2001 Executive Order Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism),
or other governmental action; (ii) are not knowingly engaged in, and shall not
engage in, any dealings or transaction or be otherwise associated with such
persons or entities described in (i) above; and (iii) are not, and shall not
become, a person or entity whose activities are regulated by the International
Money Laundering Abatement and Financial Anti-Terrorism Act of 2001 or the
regulations or orders thereunder.

INSURANCE. Grantor agrees to keep the Property insured for the protection of
Beneficiary and Beneficiary's wholly owned subsidiaries and agents in such
manner, in such amounts and in such companies as Beneficiary may from time to
time approve, and to keep the policies therefor, properly endorsed, on deposit
with Beneficiary, or at Beneficiary's option, to keep certificates of insurance
(Acord 27 for all property insurance and Acord 25-S for all liability insurance)
evidencing all insurance coverages required hereunder on deposit with
Beneficiary, which certificates shall provide at least thirty (30) days notice
of cancellation to Beneficiary and shall list Beneficiary as the certificate
holder; that insurance loss proceeds from all property insurance policies,
whether or not required by Beneficiary (less expenses of collection) shall, at
Beneficiary's option, be applied on the Indebtedness, whether due or not, or to
the restoration of the Property, or be released to Grantor, but such application
or release shall not cure or waive any default under any of the Loan Documents.
If Beneficiary elects to apply the insurance loss proceeds on the Indebtedness,
no prepayment privilege fee shall be due thereon.

      Notwithstanding the foregoing provision, Beneficiary agrees that if the
insurance loss proceeds are less than the unpaid principal balance of the Note
and if the casualty occurs prior to the last year of the term of the Note, then
the insurance loss proceeds (less expenses of collection) shall be applied to
restoration of the Property to its condition prior to the casualty, subject to
satisfaction of the following conditions:

      (a)   There is no existing Event of Default at the time of casualty, and
            if there shall occur any Event of Default after the date of the
            casualty, Beneficiary shall have no further obligation to release
            insurance loss proceeds hereunder during the continuation thereof.

      (b)   The casualty insurer has not denied liability for payment of
            insurance loss proceeds as a result of any act, neglect, use or
            occupancy of the Property by Grantor.

                                       5

<PAGE>

      (c)   Beneficiary shall be reasonably satisfied that all insurance loss
            proceeds so held, together with supplemental funds to be made
            available by Grantor, shall be sufficient to complete the
            restoration of the Property. Any remaining insurance loss proceeds
            may, at the option of Beneficiary, be applied on the Indebtedness,
            without a prepayment privilege fee, whether or not due, or be
            released to Grantor.

      (d)   If required by Beneficiary, Beneficiary shall be furnished a
            satisfactory report addressed to Beneficiary from an environmental
            engineer or other qualified professional satisfactory to Beneficiary
            to the effect that no adverse environmental impact to the Property
            resulted from the casualty.

      (e)   Beneficiary shall release casualty insurance proceeds as restoration
            of the Property progresses provided that Beneficiary is furnished
            satisfactory evidence of the costs of restoration and if, at the
            time of such release, there shall exist no Monetary Default (as
            hereinafter defined) and no default with respect to which
            Beneficiary shall have given Grantor notice pursuant to the NOTICE
            OF DEFAULT provision herein. If the estimated cost of restoration
            exceeds $250,000.00, (i) the drawings and specifications for the
            restoration shall be approved by Beneficiary in writing prior to
            commencement of the restoration, and (ii) Beneficiary shall receive
            an administration fee equal to 1% of the cost of restoration.

      (f)   Prior to each release of funds, Grantor shall obtain for the benefit
            of Beneficiary an endorsement to Beneficiary's title insurance
            policy insuring Beneficiary's lien as a first and valid lien on the
            Property subject only to liens and encumbrances theretofore approved
            by Beneficiary.

      (g)   Grantor shall pay all costs and expenses incurred by Beneficiary,
            including, but not limited to, reasonable outside legal fees, title
            insurance costs, third-party disbursement fees, third-party
            engineering reports and inspections deemed necessary by Beneficiary
            in its reasonable discretion.

      (h)   All reciprocal easement and operating agreements benefiting the
            Property, if any, shall remain in full force and effect between the
            parties thereto on and after restoration of the Property.

      (i)   Beneficiary shall be satisfied that Projected Debt Service Coverage
            of at least 1.10 will be produced from the leasing of not more than
            161 units to former residents or approved new residents with leases
            satisfactory to Beneficiary for terms of at least one year to
            commence not later than (30) days following completion of such
            restoration ("Approved Leases").

                                       6

<PAGE>

      "Projected Debt Service Coverage" means a number calculated by dividing
Projected Operating Income Available for Debt Service for the first fiscal year
following restoration of the Property by the debt service during the same fiscal
year under all indebtedness secured by any portion of the Property. For purposes
of the preceding sentence, "debt service" means the greater of (x) debt service
due under all such indebtedness during the first fiscal year following
completion of the restoration of the Property or (y) debt service that would be
due and payable during such fiscal year if all such indebtedness were amortized
over 25 years (whether or not amortization is actually required) and if interest
on such indebtedness were due as it accrues at the face rate shown on the notes
therefore (whether or not interest payments based on such face rates are
required).

      "Projected Operating Income Available for Debt Service" means projected
gross annual rent from the Approved Leases for the first full fiscal year
following completion of the restoration of the Property less:

(A)   The operating expenses of the Property for the last fiscal year preceding
      the casualty and

(B)   the following:

      (i)   a replacement reserve for capital improvements, unit remodels and
            structural items based on not less than $350 per unit per annum;

      (ii)  the amount, if any, by which actual gross income during such fiscal
            period exceeds that which would be earned from the rental of 92% of
            the units at the Property;

      (iii) the amount, if any, by which the actual management fee is less than
            5% of effective gross revenue during such fiscal period;

      (iv)  the amount, if any, by which the actual real estate taxes are less
            than $2,324 per unit per annum; and

      (v)   the amount, if any, by which total actual operating expenses,
            excluding management fees, real estate taxes and replacement
            reserves, are less than $16,530 per unit per annum.

      All projections referenced above shall be calculated in a manner
satisfactory to Beneficiary in its reasonable discretion.

                                       7

<PAGE>

CONDEMNATION. Grantor hereby assigns to Beneficiary (i) any award and any other
proceeds resulting from damage to, or the taking of, all or any portion of the
Property, and (ii) the proceeds from any sale or transfer in lieu thereof
(collectively, "Condemnation Proceeds") in connection with condemnation
proceedings or the exercise of any power of eminent domain or the threat thereof
(hereinafter, a "Taking"); any Condemnation Proceeds shall, at Beneficiary's
option, be applied on the Indebtedness, whether due or not, or to the
restoration of the Property, or be released to Grantor, but such application or
release shall not cure or waive any default under any of the Loan Documents. Any
portion of such award and proceeds not applied to restoration shall, at
Beneficiary's option, be applied on the Indebtedness, whether due or not, or be
released to Grantor, but such application or release shall not cure or waive any
default under any of the Loan Documents. Notwithstanding the foregoing, if the
Condemnation Proceeds are less than the unpaid principal balance of the Note and
such damage or Taking occurs prior to the last year of the term of the Note,
such Condemnation Proceeds (less expenses of collection) shall be applied to
restoration of the Property to its condition, or the functional equivalent of
its condition prior to the Taking, provided that restoration or replacement of
the improvements on the Land to their functional and economic utility prior to
the Taking be possible, and provided that the following conditions are
satisfied:

      (a)   There is no existing Event of Default at the time of the Taking, and
            if there shall occur any Event of Default after the date of the
            Taking, Beneficiary shall have no further obligation to release
            Condemnation Proceeds hereunder.

      (b)   Beneficiary shall be reasonably satisfied that all Condemnation
            Proceeds so held, together with supplemental funds to be made
            available by Grantor, shall be sufficient to complete the
            restoration of the Property. Any remaining Condemnation Proceeds
            may, at the option of Beneficiary, be applied on the Indebtedness,
            whether or not due, or be released to Grantor.

      (c)   If reasonably required by Beneficiary, Beneficiary shall be
            furnished a satisfactory report addressed to Beneficiary from an
            environmental engineer or other qualified professional satisfactory
            to Beneficiary to the effect that no adverse environmental impact to
            the Property resulted from the Taking.

      (d)   Beneficiary shall release Condemnation Proceeds as restoration of
            the Property progresses provided that Beneficiary is furnished
            satisfactory evidence of the costs of restoration and if, at the
            time of such release, there shall exist no Monetary Default (as
            hereinafter defined) and no default with respect to which
            Beneficiary shall have given Grantor notice pursuant to the NOTICE
            OF DEFAULT provision herein. If the estimated cost of restoration
            exceeds $250,000.00, (i) the drawings and specifications for the
            restoration

                                       8

<PAGE>

            shall be approved by Beneficiary in writing prior to commencement of
            the restoration, and (ii) Beneficiary shall receive an
            administration fee equal to 1% of the cost of restoration.

      (e)   Prior to each release of funds, Grantor shall obtain for the benefit
            of Beneficiary an endorsement to Beneficiary's title insurance
            policy insuring Beneficiary's lien as a first and valid lien on the
            Property subject only to liens and encumbrances theretofore approved
            by Beneficiary.

      (f)   Grantor shall pay all costs and expenses incurred by Beneficiary,
            including, but not limited to, outside legal fees, title insurance
            costs, third-party disbursement fees, third-party engineering
            reports and inspections deemed necessary by Beneficiary in its
            reasonable discretion.

      (g)   All reciprocal easement and operating agreements benefiting the
            Property, if any, shall remain in full force and effect between the
            parties thereto on and after restoration of the Property.

      (h)   Beneficiary shall be satisfied that Projected Debt Service Coverage
            of at least 1.10 will be produced from the leasing of not more than
            161 units to former residents or approved new residents with leases
            satisfactory to Beneficiary for terms of at least one year to
            commence not later than thirty (30) days following completion of
            such restoration ("Approved Leases").

TAXES AND SPECIAL ASSESSMENTS. Grantor agrees to pay before delinquency all
taxes and special assessments of any kind that have been or may be levied or
assessed against the Property, this instrument, the Note or the Indebtedness, or
upon the interest of Trustee or Beneficiary in the Property, this instrument,
the Note or the Indebtedness, and to procure and deliver to Beneficiary within
30 days after Beneficiary shall have given a written request to Grantor, the
official receipt of the proper officer showing timely payment of all such taxes
and assessments; provided, however, that Grantor shall not be required to pay
any such taxes or special assessments if the amount, applicability or validity
thereof shall currently be contested in good faith by appropriate proceedings
and funds sufficient to satisfy the contested amount have been deposited in an
escrow satisfactory to Beneficiary.

PERSONAL PROPERTY. With respect to the Personal Property, Grantor hereby
represents, warrants and covenants as follows:

      (a) Except for the security interest granted hereby, Grantor is, and as to
portions of the Personal Property to be acquired after the date hereof will be,
the sole owner of the Personal Property, free from any lien, security interest,
encumbrance or adverse claim thereon of any kind whatsoever, except as otherwise
permitted herein. Grantor shall notify Beneficiary of, and shall indemnify and
defend Beneficiary and the Personal Property

                                       9

<PAGE>

against, all claims and demands of all persons at any time claiming the Personal
Property or any part thereof or any interest therein.

      (b) Except as otherwise provided above, Grantor shall not lease, sell,
convey or in any manner transfer the Personal Property without the prior consent
of Beneficiary.

      (c) Until the Indebtedness is paid in full, Grantor (i) shall not change
its legal name without providing Beneficiary with thirty (30) days prior written
notice; (ii) shall not change its state of organization and (iii) shall preserve
its existence and shall not, in one transaction or a series of transactions,
merge into or consolidate with any other entity.

      (d) At the request of Beneficiary, Grantor shall join Beneficiary in
executing one or more financing statements and continuations and amendments
thereof pursuant to the Uniform Commercial Code in form satisfactory to
Beneficiary, and Grantor shall pay the cost of filing the same in all public
offices wherever filing is deemed by Beneficiary to be necessary or desirable.
Grantor shall also, at Grantor's expense, take any and all other action
requested by Beneficiary to perfect Beneficiary's security interest under the
Uniform Commercial Code with respect to the Personal Property, including,
without limitation, exercising Grantor's commercially reasonable efforts to
obtain any consents, agreements or acknowledgments required of third parties to
perfect Beneficiary's security interest in Personal Property consisting of
deposit accounts, letter-of-credit rights, investment property, and electronic
chattel paper.

OTHER LIENS. Grantor agrees to keep the Property or any Personal Property free
from all other liens either prior or subsequent to the lien created by this
instrument except for that certain Gaines Ranch Second Deed of Trust and
Security Agreement of even date herewith, that certain Gaines Ranch Third Deed
of Trust and Security Agreement of even date herewith, and any trade debt shown
on Exhibit B attached hereto. The (i) creation of any other lien on any portion
of the Property or on any Personal Property, whether or not prior to the lien
created hereby, (ii) assignment or pledge by Grantor of its revocable license to
collect, use and enjoy rents and profits from the Property, or (iii) granting or
permitting of a security interest in or other encumbrance on the ownership
interests in Grantor, shall constitute a default under the terms of this
instrument; except that upon written notice to Beneficiary, Grantor may, after
the Loan Closing Date (as defined in the Commitment), proceed to contest in good
faith and by appropriate proceedings any mechanics liens, tax liens or judgment
liens with respect to the Property or any Personal Property described herein,
provided funds sufficient to satisfy the contested amount have been deposited in
an escrow account satisfactory to Beneficiary.

COSTS, FEES AND EXPENSES. Grantor agrees to pay all costs, fees and expenses of
this trust; to appear in and defend any action or proceeding purporting to
affect the security hereof or the rights or powers of Beneficiary or Trustee
hereunder; to pay all costs and expenses, including the cost of obtaining
evidence of title and reasonable attorney's fees, incurred in

                                       10

<PAGE>

connection with any such action or proceeding; and to pay any and all attorney's
fees and expenses of collection and enforcement in the event the Note is placed
in the hands of an attorney for collection, enforcement of any of the Loan
Documents is undertaken or suit is brought thereon.

FAILURE OF GRANTOR TO ACT. If Grantor fails to make any payment or do any act as
herein provided, Beneficiary or Trustee may, without obligation so to do,
without notice to or demand upon Grantor and without releasing Grantor from any
obligation hereof: (i) make or do the same in such manner and to such extent as
Beneficiary may deem necessary to protect the security hereof, Beneficiary or
Trustee being authorized to enter upon the Property for such purpose; (ii)
appear in and defend any action or proceeding purporting to affect the security
hereof, or the rights or powers of Beneficiary or Trustee; (iii) pay, purchase,
contest or compromise any encumbrance, charge or lien which in the judgment of
Beneficiary appears to be prior or superior hereto; and (iv) in exercising any
such powers, pay necessary expenses, employ counsel and pay its reasonable fees.
Sums so expended shall be payable by Grantor immediately upon demand with
interest from date of expenditure at the Default Rate (as defined in the Note).
All sums so expended by Beneficiary and the interest thereon shall be included
in the Indebtedness and secured by the lien of this instrument.

EVENT OF DEFAULT. Any default by Grantor in making any required payment of the
Indebtedness or any default in any provision, covenant, agreement, warranty or
certification contained in any of the Loan Documents shall, except as provided
in the two immediately succeeding paragraphs, constitute an "Event of Default".

NOTICE OF DEFAULT. A default in any payment required in the Note or any other
Loan Document, whether or not payable to Beneficiary, (a "Monetary Default")
shall not constitute an Event of Default unless Beneficiary shall have given a
written notice of such Monetary Default to Grantor and Grantor shall not have
cured such Monetary Default by payment of all amounts in default (including
payment of interest at the Default Rate, as defined in the Note, from the date
of default to the date of cure on amounts owed to Beneficiary) within five (5)
business days after the date on which Beneficiary shall have given such notice
to Grantor.

      Any other default under the Note or under any other Loan Document (a
"Non-Monetary Default") shall not constitute an Event of Default unless
Beneficiary shall have given a written notice of such Non-Monetary Default to
Grantor and Grantor shall not have cured such Non-Monetary Default within thirty
(30) days after the date on which Beneficiary shall have given such notice of
default to Grantor (or, if the Non-Monetary Default is not curable within such
30-day period, Grantor shall not have diligently undertaken and continued to
pursue the curing of such Non-Monetary Default and deposited an amount
sufficient to cure such Non-Monetary Default in an escrow account satisfactory
to Beneficiary).

                                       11

<PAGE>

      In no event shall the notice and cure period provisions recited above
constitute a grace period for the purposes of commencing interest at the Default
Rate (as defined in the Note).

SUBSTITUTION OF TRUSTEE. Beneficiary and its successors and assigns may for any
reason and at any time appoint a new or substitute Trustee by written
appointment delivered to such new or substitute Trustee without notice to
Grantor, without notice to, or the resignation or withdrawal by, the existing
Trustee and without recordation of such written appointment unless notice or
recordation is required by the laws of the jurisdiction in which the Property is
located. Upon delivery of such appointment, the new or substitute Trustee shall
be vested with the same title and with the same powers and duties granted to the
original Trustee.

APPOINTMENT OF RECEIVER. Upon commencement of any proceeding to enforce any
right under this instrument, including foreclosure thereof, Beneficiary (without
limitation or restriction by any present or future law, without regard to the
solvency or insolvency at that time of any party liable for the payment of the
Indebtedness, without regard to the then value of the Property, whether or not
there exists a threat of imminent harm, waste or loss to the Property and
whether or not the same shall then be occupied by the owner of the equity of
redemption as a homestead) shall have the absolute right to the appointment of a
receiver of the Property and of the revenues, rents, profits and other income
therefrom, and said receiver shall have (in addition to such other powers as the
court making such appointment may confer) full power to collect all such income
and, after paying all necessary expenses of such receivership and of operation,
maintenance and repair of said Property, to apply the balance to the payment of
any of the Indebtedness then due.

FORECLOSURE. Upon the occurrence of an Event of Default, the entire unpaid
Indebtedness shall, at the option of Beneficiary (to be exercised at any time
that said Event of Default continues to exist), become immediately due and
payable for all purposes without any notice or demand, except as required by law
(ALL OTHER NOTICE OF THE EXERCISE OF SUCH OPTION BEING HEREBY EXPRESSLY WAIVED),
and Beneficiary may, in addition to exercising any rights it may have with
respect to the Personal Property under the Uniform Commercial Code of the
jurisdiction in which the Property is located, institute proceedings in any
court of competent jurisdiction to foreclose this instrument as a mortgage, or
to enforce any of the covenants hereof, or Trustee or Beneficiary may, either
personally or by agent or attorney in fact, enter upon and take possession of
the Property and may manage, rent or lease the Property or any portion thereof
upon such terms as Beneficiary may deem expedient, and collect, receive and
receipt for all rentals and other income therefrom and apply the sums so
received as hereinafter provided in case of sale. Trustee is hereby further
authorized and empowered, either after or without such entry, to sell and
dispose of the Property en masse or in separate parcels (as Trustee may think
best), and all the right, title and interest of Grantor, by advertisement or in
any manner provided

                                       12

<PAGE>

by the laws of the jurisdiction in which the Property is located (GRANTOR HEREBY
EXPRESSLY WAIVES ANY RIGHT TO A HEARING PRIOR TO SUCH SALE), and to issue,
execute and deliver a deed of conveyance, all as then may be provided by law;
and Trustee shall, out of the proceeds or avails of such sale, after first
paying and retaining all fees, charges, costs of advertising the Property and of
making said sale, and attorney's fees as herein provided, pay to Beneficiary or
the legal holder of the Indebtedness the amount thereof, including all sums
advanced or expended by Beneficiary or the legal holder of the Indebtedness,
with interest from date of advance or expenditure at the Default Rate (as
defined in the Note), rendering the excess, if any, as provided by law; such
sale or sales and said deed or deeds so made shall be a perpetual bar, both in
law and equity, against Grantor and the heirs, successors and assigns of
Grantor, and all other persons claiming the Property aforesaid, or any part
thereof by, from, through or under Grantor. The legal holder of the Indebtedness
may purchase the Property or any part thereof, and it shall not be obligatory
upon the purchasers at any such sale to see to the application of the purchase
money.

      In addition to the above remedies, it is agreed that upon the occurrence
of an Event of Default, Beneficiary may, at its option (to be exercised at any
time that said Event of Default continues to exist), without demand or notice,
request the Trustee, and the Trustee shall be, and is hereby authorized and
empowered to proceed with foreclosure and sale of the Property by advertisement
or in any manner provided by the laws of the state in which the Property is
located in satisfaction of the item in default as if under a full foreclosure,
but without declaring the unmatured portion of the Indebtedness due; such sale
shall be made subject to the unmatured portion of the Indebtedness and it is
agreed that such sale shall not in any manner affect the unmatured portion of
the Indebtedness, but as to such unmatured portion, this instrument shall remain
in full force and effect just as though no sale had been made under the
provisions of this paragraph and it is further agreed that several sales may be
made without exhausting the right of sale for any unmatured portion of the
Indebtedness or for any future breach of the covenants, conditions or
stipulations set out herein.

APPRAISEMENT, STAY AND REDEMPTION LAWS. Grantor expressly waives and
relinquishes the benefit of all laws now existing or that may hereafter be
enacted providing for any appraisement before sale of any of the Property,
commonly known as Appraisement Laws, and also the benefit of all laws that may
hereafter be enacted in any way extending the time for the enforcement or the
collection of the Indebtedness, or creating or extending a period for redemption
from any sale made to collect the Indebtedness, commonly known as Stay Laws and
Redemption Laws.

CROSS-DEFAULT; ANTIMARSHALLING. In the event there shall be a default under that
certain Southfield Second Mortgage and Security Agreement (the "Southfield
Second Lien Instrument") of even date herewith executed by Brookdale Senior
Housing, LLC (the "LLC Borrower") and granting a second lien on certain property
in the County of Oakland, State of Michigan (the "Southfield Property") to
Beneficiary or that certain Devonshire Second Open-End Mortgage and Security
Agreement (the "Devonshire

                                       13

<PAGE>

Second Lien Instrument") of even date herewith executed by LLC Borrower and
granting a second lien on certain property in the County of Allegheny,
Commonwealth of Pennsylvania (the "Devonshire Property") to Beneficiary, such
default shall constitute a default under this instrument and Beneficiary, at its
option after such default becomes an Event of Default, may declare the
Indebtedness due and collectible at once, and may exercise or cause to be
exercised, all of its rights and remedies under this instrument, the Southfield
Second Lien Instrument, and the Devonshire Second Lien Instrument, concurrently
or separately and in such order as Beneficiary may determine.

In the event there shall be any Event of Default under this instrument,
Beneficiary may institute (i) a joint proceeding with respect to this
instrument, the Southfield Second Lien Instrument, and the Devonshire Second
Lien Instrument or (ii) separate proceedings with respect to each lien
instrument. Said separate proceedings may be instituted simultaneously or in
such order and at such times as Beneficiary may elect and no such election shall
waive any right of Beneficiary to subsequently enforce any such lien instrument
in the same or any other proceedings. The pendency of any proceedings with
respect to any lien instrument shall not be grounds for the abatement or for
hindering, delaying or preventing any proceedings with respect to any other lien
instrument. An Event of Default under each lien instrument shall constitute a
separate cause of action, and the institution of proceedings upon one or two,
but not all three, shall not be construed as a splitting or waiver of a cause by
Beneficiary. Grantor, on behalf of itself and any transferee of the Property,
hereby waives any right which it may have to require Beneficiary, and
Beneficiary shall not be required, to marshall assets or to proceed against any
one property secured by said lien instruments prior to or contemporaneously with
proceeding against any other property secured by said lien instruments, or to
proceed against the property upon which a lien is placed by any one lien
instrument prior to or contemporaneously with proceeding against a property upon
which a lien is placed by any other lien instrument.

Grantor acknowledges and agrees that (a) the foregoing cross default provisions
are a material part of the consideration given to Beneficiary as an inducement
to make the loans evidenced by the Note and that certain Promissory Note of even
date herewith executed by LLC Borrower in favor of Beneficiary, (b) Grantor and
the LLC Borrower are affiliates and each has received valuable consideration as
a result of Beneficiary agreeing to make said loans, and (c) the structure of
said loans including multiple notes and mortgages and the cross default
provisions are agreed to by Grantor as an inducement to Beneficiary to make the
loans at the amounts and the interest rate provided therein.

PROHIBITION ON TRANSFER. The present ownership and management of the Property is
a material consideration to Beneficiary in making the loan secured by this
instrument, and Grantor shall not (i) convey title to all or any part of the
Property, (ii) enter into any contract to convey (land contract/installment
sales contract/contract for deed) title to all or any part of the Property which
gives a purchaser possession of, or income from, the Property prior to a
transfer of title to all or any part of the Property ("Contract to

                                       14

<PAGE>

Convey") or (iii) cause or permit a Change in the Proportionate Ownership (as
hereinafter defined) of Grantor. Any such conveyance, entering into a Contract
to Convey or Change in the Proportionate Ownership of Grantor shall constitute a
default under the terms of this instrument.

      For purposes of this instrument, a "Change in the Proportionate Ownership"
means in the case of a corporation, a change in, or the existence of a lien on,
the ownership of the voting stock of such corporation; in the case of a trust, a
change in, or the existence of a lien on, the beneficial ownership of such
trust; in the case of a limited liability company, a change in the ownership of,
or the existence of a lien on, the limited liability company interests of such
limited liability company; in the case of a partnership, a change in the
ownership of, or the existence of a lien on, the partnership interests of such
partnership, or any change in the direct and indirect ownership interests of
Grantor such that Principal no longer continues to own, directly or indirectly,
free and clear of any security interest, a 100% interest in Grantor or no longer
has a controlling interest in Grantor.

      Notwithstanding the foregoing, a transfer of the direct and indirect
ownership interests in Grantor shall be permitted if and only if the following
is true immediately after such transfer: (a) Principal continues to own,
directly or indirectly, free and clear of any security interest, a 100% interest
in Grantor; and (b) Principal has a controlling interest in Grantor; provided
that if at any time thereafter clauses (a) and (b) above do not continue to be
true, a change in the proportionate ownership of Grantor shall be deemed to have
taken place in violation of this provision. For purposes hereof, the
"controlling interest" shall mean the possession by any person, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of another entity, whether through ownership interest, by contract or
otherwise.

FINANCIAL STATEMENTS. Grantor agrees to furnish to Beneficiary:

(A) the following financial statements for the Property within 90 days after the
close of each fiscal year of the Grantor (the "Property Financial Statements Due
Date"):

      (i)   an audited balance sheet as of the last day of such fiscal year; and

      (ii)  an audited statement of operations for such fiscal year with a
            detailed line item break-down of all sources of income and expenses,
            including capital expenses broken down between leasing commissions,
            tenant improvements, capital maintenance, common area renovation,
            and expansion; and if the audited statement is not detailed, an
            unaudited statement with sufficient detail will also be required;
            and

                                       15

<PAGE>

      (iii) a current rent roll identifying location, leased area, lease begin
            and end dates, current contract rent, rent increases and increase
            dates, percentage rent, expense reimbursements, and any other
            recovery items; and

      (iv)  a sales report for such fiscal year identifying monthly and yearly
            sales by all tenants required under their leases to report sales;
            and

      (v)   an operating budget for the current fiscal year; and

      (vi)  an audited statement of cash flows for such fiscal year; and

(B) the following financial statements for Principal within 90 days after the
close of each fiscal year of Principal (the "Principal Financial Statements Due
Date")

      (i)   an audited balance sheet as of the last day of such fiscal year; and

      (ii)  an audited statement of cash flows for such fiscal year.

      The Property Financial Statements Due Date and the Principal Financial
Statements Due Date are each sometimes hereinafter referred to as a "Financial
Statements Due Date".

      The audited financial statements identified in sections (A)(i), (A)(ii),
(B)(i) and (B)(ii) above shall each be prepared in accordance with generally
accepted accounting principles by Ernst & Young, LLP. All unaudited statements
shall contain a certification by a senior officer of the general partner of
Grantor stating that they have been prepared in accordance with generally
accepted accounting principles and that they are true and correct. The expense
of preparing all of the financial statements required in (A) and (B) above,
shall be borne by Grantor.

      Grantor acknowledges that Beneficiary requires the financial statements to
record accurately the value of the Property for financial and regulatory
reporting.

      In addition to all other remedies available to Beneficiary hereunder, at
law and in equity, if any financial statement or proof of payment of property
taxes and assessments is not furnished to Beneficiary as required in this
section entitled "FINANCIAL STATEMENTS" and in the section entitled "TAXES AND
SPECIAL ASSESSMENTS", within 30 days after Beneficiary shall have given written
notice to Grantor that it has not been received as required,

      (x) interest on the unpaid principal balance of the Indebtedness shall as
      of the applicable Financial Statements Due Date or the date such proof of
      payment of property taxes and assessments was due, accrue and become
      payable at a rate equal to the sum of the Interest Rate (as defined in the
      Note) plus one percent (1%) per annum (the "Increased Rate"); and

                                       16

<PAGE>

      (y) Beneficiary may elect to obtain an independent appraisal and audit of
      the Property at Grantor's expense, and Grantor agrees that it will, upon
      request, promptly make Grantor's books and records regarding the Property
      available to Beneficiary and the person(s) performing the appraisal and
      audit (which obligation Grantor agrees can be specifically enforced by
      Beneficiary).

      The amount of the payments due under the Note during the time in which the
Increased Rate shall be in effect shall be increased to reflect the higher
interest rate. Interest shall continue to accrue and be due and payable monthly
at the Increased Rate until the financial statements and proof of payment of
property taxes and assessments (as requested by Beneficiary) shall be furnished
to Beneficiary as required. Commencing on the date on which the financial
statements and proof of payment of property taxes and assessments are received
by Beneficiary, interest on the unpaid principal balance shall again accrue at
the Interest Rate and the payments due during the remainder of the term of the
Note shall be reduced to reflect the lower interest rate. Notwithstanding the
foregoing, Beneficiary shall have the right to conduct an independent audit at
its own expense at any time.

COMPLIANCE WITH WATER REGULATIONS. Grantor agrees to abide by all the statutes
of the state in which the Property is located and the rules and regulations of
any and all federal, state and local authority having jurisdiction over the use
and distribution of water or water resources, and shall not transfer, sell,
assign or relinquish the water rights now held or hereafter acquired covering
the Property without the written consent of the Beneficiary.

PROPERTY MANAGEMENT. The management company shall be satisfactory to Beneficiary
during the term of the Note. Beneficiary hereby acknowledges that BLC of
Texas-II, L.P. shall be deemed satisfactory to Beneficiary. The Management and
Operating Agreement for the Property shall be satisfactory to Beneficiary. The
termination of, or a material modification to, the Management and Operating
Agreement for the Property without Beneficiary's prior written consent shall be
a default under this instrument. Without limiting the generality of the
foregoing, the Management and Operating Agreement for the Property shall contain
the following provisions:

      (i)   Prohibition of contracts with affiliates of Principal, without the
            prior written approval of Beneficiary.

      (ii)  No assignment of the management agreement by the manager, except to
            an entity with Principal as the majority owner; provided, however,
            that such entity must be of the same size and expertise as the prior
            manager; and provided further, however, that such assignment is
            subject to Beneficiary's prior written approval, which approval will
            not be unreasonably withheld. Notwithstanding any other language
            contained herein to the contrary, Beneficiary will not unreasonably
            withhold its written approval to an

                                       17

<PAGE>

            assignment of the management agreement by the manager to a
            wholly-owned subsidiary of Principal.

      (iii) Any third party service contract entered into by the manager shall
            have a term of not more than one (1) year, with a thirty (30) day
            cancellation provision.

      (iv)  Beneficiary may, at its option, require the Grantor to terminate the
            management agreement and contract with a new manager (subject to the
            approval of Beneficiary) for any of the following reasons:

            (a)   Any material enforcement action is brought against the
                  Property.

            (b)   The loss of Mark Schulte as Chairman and Chief Executive
                  Officer of Principal or his incapacity. In the event Mark
                  Schulte is incapacitated or is no longer Chairman and Chief
                  Executive Officer of Principal for any reason, Principal may
                  have up to twelve (12) months after such incapacity of Mark
                  Schulte or failure of Mark Schulte to be Chairman and Chief
                  Executive Officer of Principal to hire or retain a successor
                  (the "Successor Naming Allowed Time"). If either of the
                  following occurs: (i) a successor is not timely named by
                  Principal within the Successor Naming Allowed Time; or (ii)
                  Beneficiary fails to approve the named successor within a
                  ninety (90) day period following the hiring of such successor,
                  which approval or disapproval shall be in Beneficiary's sole
                  discretion, and Beneficiary gives written notice of its
                  requirement that the Grantor terminate the management
                  agreement within said ninety (90) day period, Grantor shall be
                  required to terminate the management agreement.

            (c)   Any wasting of the Property.

            (d)   Any default under the management agreement or either of the
                  Management and Operating Agreements executed with respect to
                  the Southfield Property and the Devonshire Property pursuant
                  to the terms thereof.

RIGHT OF FIRST REFUSAL FOR FUTURE FINANCING INVOLVING THE PROPERTY. Beneficiary
shall have the right of first refusal for any future mortgage loan,
purchase/lease or other financing transaction involving the Property to be
obtained by or for the benefit of Grantor or any person or entity controlled by,
related to or associated with Grantor.

      In the event Grantor submits to Beneficiary a proposal seeking financing
together with sufficient documentation (of the type customarily provided to
financial institutions in

                                       18

<PAGE>

such circumstances) to permit evaluation and underwriting, the proposal shall be
submitted to Beneficiary at its Chicago Real Estate Investment Office.
Beneficiary shall have thirty (30) days after receipt by Beneficiary of said
proposal to notify Grantor of its desire to recommend to Beneficiary's Home
Office that Beneficiary provide financing on similar terms. If Beneficiary's
Regional Office so notifies Grantor within such 30-day period, Beneficiary shall
have an additional 30 days to obtain Finance Committee approval. If approval is
not obtained or Borrower is not notified in writing within the time periods
specified in this condition, then Borrower shall be permitted to seek financing
from other lending institutions, subject to the two immediately succeeding
paragraphs.

      In the event Grantor receives a bona fide offer of financing from another
lending institution, Grantor shall submit to Beneficiary a copy of a bona fide
offer of financing from another lending institution which describes (a) the loan
amount, (b) term, (c) security, (d) interest rate, (e) frequency of payments,
(f) prepayment terms and (g) loan fees, together with sufficient information
about the proposed development to permit evaluation and underwriting, the
proposal shall be submitted to Beneficiary at its Chicago Real Estate Investment
Office. Beneficiary shall have thirty (30) days after receipt by Beneficiary of
said bona fide offer to notify Grantor of its desire to recommend to
Beneficiary's Home Office that Beneficiary provide financing on similar terms.
If Beneficiary's Regional Office so notifies Grantor within such 30-day period,
Beneficiary shall have an additional 30 days to obtain Finance Committee
approval. If approval is not obtained or Borrower is not notified in writing
within the time periods specified in this condition, then Borrower shall be
released from this provision as to that particular bona fide offer only.

      If Grantor accepts any financing, Grantor agrees to accept any financing
offered by Beneficiary pursuant to its right of first refusal provided that
Beneficiary's financing offered is on competitive terms with commitments or
offers received from other sources for the same financing. Beneficiary's refusal
to offer the financing requested shall not be deemed to be a waiver by
Beneficiary of its right of first refusal to finance the same Property if
Grantor is unsuccessful in procuring from another source that financing which
was previously offered to and refused by Beneficiary. Regardless of whether a
bona fide offer brought to Beneficiary for financing involves just one of the
Property, the Devonshire Property, or the Southfield Property, a combination of
two of them, or all three of them, Beneficiary's right of first refusal shall
only be with respect to the particular combination or property involved in the
offer brought to it by Grantor, and Beneficiary shall not have a right of first
refusal for a different combination or a different property.

DEPOSITS BY GRANTOR. To assure the timely payment of real estate taxes and
special assessments (including personal property taxes, if appropriate), upon
the occurrence of an Event of Default, Beneficiary shall thence forth have the
option to require Grantor to deposit funds with Beneficiary, in monthly or other
periodic installments in amounts estimated by Beneficiary from time to time
sufficient to pay real estate taxes and special assessments as they become due.
If at any time the funds so held by Beneficiary shall be

                                       19

<PAGE>

insufficient to pay any of said expenses, Grantor shall, upon receipt of notice
thereof, immediately deposit such additional funds as may be necessary to remove
the deficiency. All funds so deposited shall be irrevocably appropriated to
Beneficiary to be applied to the payment of such real estate taxes and special
assessments and, at the option of Beneficiary after default, the Indebtedness.

NOTICES. Any notices, demands, requests and consents permitted or required
hereunder or under any other Loan Document shall be in writing, may be delivered
personally or sent by certified mail with postage prepaid or by reputable
courier service with charges prepaid. Any notice or demand sent to Grantor by
certified mail or reputable courier service shall be addressed to Grantor at c/o
Brookdale Living Communities, Inc., Attn: R. Stanley Young, 330 North Wabash
Avenue, Suite 1400, Chicago, IL, 60611 with a copy to c/o Brookdale Living
Communities, Inc., Attn: Deborah Paskin, 330 N. Wabash Avenue, Suite 1400,
Chicago, IL, 60611 or such other address in the United States of America as
Grantor shall designate in a notice to Beneficiary given in the manner described
herein. Any notice sent to Beneficiary by certified mail or reputable courier
service shall be addressed to The Northwestern Mutual Life Insurance Company to
the attention of the Real Estate Investment Department at 720 East Wisconsin
Avenue, Milwaukee, WI 53202, or at such other addresses as Beneficiary shall
designate in a notice given in the manner described herein. Any notice given to
Beneficiary shall refer to the Loan No. set forth above. Any notice or demand
hereunder shall be deemed given when received. Any notice or demand which is
rejected, the acceptance of delivery of which is refused or which is incapable
of being delivered during normal business hours at the address specified herein
or such other address designated pursuant hereto shall be deemed received as of
the date of attempted delivery.

MODIFICATION OF TERMS. Without affecting the liability of Grantor or any other
person (except any person expressly released in writing) for payment of the
Indebtedness or for performance of any obligation contained herein and without
affecting the rights of Beneficiary with respect to any security not expressly
released in writing, Beneficiary may, at any time and from time to time, either
before or after the maturity of the Note, without notice or consent: (i) release
any person liable for payment of all or any part of the Indebtedness or for
performance of any obligation; (ii) make any agreement extending the time or
otherwise altering the terms of payment of all or any part of the Indebtedness,
or modifying or waiving any obligation, or subordinating, modifying or otherwise
dealing with the lien or charge hereof; (iii) exercise or refrain from
exercising or waive any right Beneficiary may have; (iv) accept additional
security of any kind; (v) release or otherwise deal with any property, real or
personal, securing the Indebtedness, including all or any part of the Property.

EXERCISE OF OPTIONS. Whenever, by the terms of this instrument, of the Note or
any of the other Loan Documents, Beneficiary is given any option, such option
may be exercised when the right accrues, or at any time thereafter, and no
acceptance by Beneficiary of payment of

                                       20

<PAGE>

Indebtedness in default shall constitute a waiver of any default then existing
and continuing or thereafter occurring.

NATURE AND SUCCESSION OF AGREEMENTS. Each of the provisions, covenants and
agreements contained herein shall inure to the benefit of, and be binding on,
the heirs, executors, administrators, successors, grantees, and assigns of the
parties hereto, respectively, and the term "Beneficiary" shall include the owner
and holder of the Note.

LEGAL ENFORCEABILITY. No provision of this instrument, the Note or any other
Loan Documents shall require the payment of interest or other obligation in
excess of the maximum permitted by law. If any such excess payment is provided
for in any Loan Documents or shall be adjudicated to be so provided, the
provisions of this paragraph shall govern and Grantor shall not be obligated to
pay the amount of such interest or other obligation to the extent that it is in
excess of the amount permitted by law.

LIMITATION OF LIABILITY. Notwithstanding any provision contained herein to the
contrary, the personal liability of Grantor shall be limited as provided in the
Note.

MISCELLANEOUS. Time is of the essence in each of the Loan Documents. The
remedies of Beneficiary as provided herein or in any other Loan Document or at
law or in equity shall be cumulative and concurrent, and may be pursued singly,
successively, or together at the sole discretion of Beneficiary, and may be
exercised as often as occasion therefor shall occur; and neither the failure to
exercise any such right or remedy nor any acceptance by Beneficiary of payment
of Indebtedness in default shall in any event be construed as a waiver or
release of any right or remedy. Neither this instrument nor any other Loan
Document may be modified or terminated orally but only by agreement or discharge
in writing and signed by Grantor and Beneficiary. If any of the provisions of
any Loan Document or the application thereof to any persons or circumstances
shall to any extent be invalid or unenforceable, the remainder of such Loan
Document and each of the other Loan Documents, and the application of such
provision or provisions to persons or circumstances other than those as to whom
or which it is held invalid or unenforceable, shall not be affected thereby, and
every provision of each of the Loan Documents shall be valid and enforceable to
the fullest extent permitted by law.

WAIVER OF JURY TRIAL. Grantor hereby waives any right to trial by jury with
respect to any action or proceeding (a) brought by Grantor, Beneficiary or any
other person relating to (i) the obligations secured hereby and/or any
understandings or prior dealings between the parties hereto or (ii) the Loan
Documents or the Environmental Indemnity Agreement, or (b) to which Beneficiary
is a party.

CAPTIONS. The captions contained herein are for convenience and reference only
and in no way define, limit or describe the scope or intent of, or in any way
affect this instrument.

                                       21

<PAGE>

GOVERNING LAW. This instrument, the interpretation hereof and the rights,
obligations, duties and liabilities hereunder shall be governed and controlled
by the laws of the state in which the Property is located.

      IN WITNESS WHEREOF, this instrument has been executed by the Grantor as of
the day and year first above written.

                           BORROWER: AH TEXAS OWNER LIMITED
                                     PARTNERSHIP, an Ohio limited partnership

                                     By: AH Texas CGP, Inc., an Ohio
                                         corporation, its sole general partner

                                         By: /s/ R. Stanley Young
                                            ---------------------------------
                                            R. Stanley Young
                                            Its Vice President

STATE OF Illinois)
          ) ss.
COUNTY OF Cook   )

      BEFORE ME, the undersigned authority, on this day personally appeared R.
Stanley Young, known to me to be the person whose name is subscribed to the
foregoing instrument, and known to me to be the Vice President, of AH Texas CGP,
Inc., an Ohio corporation, the sole general partner of AH TEXAS OWNER LIMITED
PARTNERSHIP, an Ohio limited partnership, and acknowledged to me that he
executed said instrument for the purposes and considerations therein expressed,
and as the act of said limited partnership.

      GIVEN under my hand and official seal, this 30th day of September, 2003.

                                                  /s/ Cheryl Miller
                                                -------------------------------
                                                         Notary Public

My commission expires: 5/31/06

This instrument was prepared by James L. McFarland, Attorney, for The
Northwestern Mutual Life Insurance Company, 720 East Wisconsin Avenue,
Milwaukee, WI 53202.

                                       22

<PAGE>

                                   EXHIBIT "A"

                         GAINES RANCH LEGAL DESCRIPTION:

Parcel 1:

Being Lot 2, in Block A, of RESUBDIVISION OF LOT 1, BLOCK A, GAINES RANCH PUD,
SECTION ONE, an Addition to Travis County, Texas, according to the Map thereof
recorded in Volume 99, Page 175, of the Plat Records of Travis County, Texas.

Parcel 2:

Easement and right-of-way for ingress and egress over and across Lot 7 for the
benefit of Parcel 1 as granted in Dedication recorded in Volume 13244, Page
2843, Real Property Records of Travis County, Texas.

Tax Parcel No. 04072701300000

                                       23

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