DEVELOPMENT AGREEMENT

                                  (STUDIO CITY)



        This DEVELOPMENT AGREEMENT (the "Agreement") is executed as of December

23, by and between SUNRISE DEVELOPMENT, INC., a Virginia corporation

("Developer") and AL U.S./STUDIO CITY SENIOR HOUSING, L.P., a California limited

partnership ("Owner").



                                    RECITALS



        A. Owner desires to own and develop an assisted living project (the

"Facility") to be located in LaPalma, California, as more particularly described

on Exhibit A (the "Site");



        B. Owner wishes to engage Developer for certain acquisition, zoning,

site plan approval, development, design and construction management services

with respect to the Facility and Developer desires to provide such services,

pursuant to the terms set forth herein.



        C. The costs of construction of the Facility will be paid in part from

the proceeds of a construction loan (the "Loan") made to Owner by GMAC

Commercial Mortgage Corporation ("Construction Lender"). The Loan will be made

pursuant to a Loan Agreement by and between Owner and Construction Lender (the

"Loan Agreement"), will be evidenced by a certain Promissory Note of even date

therewith, and will be secured by a certain Deed of Trust encumbering the Site.



        NOW, THEREFORE, the parties hereto agree as follows:



                                    ARTICLE I

              APPOINTMENT OF DEVELOPER; TERM; AUTHORITY; PERSONNEL



        1.01 Appointment of Developer. Owner hereby appoints Developer and

Developer hereby accepts appointment, subject to the terms and conditions of

this Agreement, as development agent to provide certain acquisition, zoning,

site plan approval, development, design and construction management services

with respect to the Facility, and to develop the Facility in accordance with the

"Development Plan" (as defined in Section 2.04 below), within the time specified

in the "Progress Schedule" (described in Section 2.04 below) and the terms and

conditions of this Agreement. Developer shall exercise commercially reasonable

and diligent and good faith efforts, skill and judgment in the performance of

its obligations. Developer shall act as Owner's representative with respect to

all aspects of the development of the Facility and shall use reasonable and

diligent efforts to comply with and perform all obligations of Owner under any

agreements affecting the Facility (excluding funding obligations, other than as

set forth in Section 2.07) and, generally, to execute and implement the

activities and directions contemplated in the Development Plan.





{PAGE}



        1.02 Term. This Agreement shall begin upon execution by the parties and

continue until Developer completes its services hereunder and is paid in full

therefor (the "Term"), unless this Agreement is sooner terminated pursuant to

the terms hereof.



        1.03 Authority of Developer; Evidence of Authority.



                (a) Developer shall have full power and authority, acting alone

or through others, in the exercise of its reasonable business judgment, to take

all actions on behalf of Owner necessary or appropriate to perform its duties

under this Agreement, but only to the extent consistent with this Agreement and

confirmed and authorized in an applicable approved Development Plan, related

"Development Budget" (as defined in Section 2.04(b)) or as otherwise

specifically approved or directed in writing by Owner.



                (b) Owner shall execute and provide Developer with such written

confirmation of Developer's authority as Developer may from time to time request

of Owner. Developer is authorized and empowered by Owner to execute and deliver

in the name and on behalf of Owner all documents and instruments necessary in

order to perform its duties with respect to the development, construction and

management of the Facility in accordance with this Agreement.



        1.04 Employees. All persons employed by Developer in connection with the

services to be rendered hereunder shall be Developer's employees or independent

contractors, and shall not be the employees or agents of Owner. Developer shall

be solely responsible for the salaries of its employees and any employee

benefits, including, without limitation, wages, worker's compensation benefits,

employment and social security taxes and fringe benefits, to which Developer's

employees may claim to be entitled. Developer shall fully comply with all

applicable laws and regulations having to do with worker's compensation, social

security, unemployment insurance, hours of labor, wages, working conditions, and

other employer-employee related subjects. Developer represents that it is and

will continue to be an equal opportunity employer.



        1.05 Personnel. Developer shall at all times provide such experienced

personnel as are reasonably required to carry out the obligations of Developer

under this Agreement, including, without limitation, (a) the services of William

D. Shields, Mark Owens (in the Eastern portion of the U.S.) and Chris Tatum (in

the Western portion of the U.S.) and/or their respective successors with

Developer, which successors shall be reasonably satisfactory to AEW Senior

Housing Company, LLC ("AEW")(acting on behalf of Owner), and (b) the active

participation of management and financial personnel necessary and qualified to

perform Developer's obligations under this Agreement.



        1.06 Compliance. Developer shall at all times exercise reasonably

diligent efforts to ensure that the acquisition, development and construction of

the Facility and all activities with respect to the Facility shall be conducted

in material compliance with all applicable laws and regulations. Developer shall

maintain in good standing during the term of this Agreement any and all material

licenses required to perform its obligations under this Agreement.





                                       2

{PAGE}



        1.07 Overall Standard of Care. Developer shall at all times perform the

duties and undertake the responsibilities set forth in this Agreement,

exercising its commercially reasonable skill and judgment in furthering the

interests of Owner and using diligent efforts at all times in the performance of

obligations. Developer shall exercise diligent efforts to ensure the proper

protection of and accounting for the Facility and all proceeds thereof, shall

deal at "arms-length" with all third parties and, except with the prior written

approval of Owner or otherwise as authorized under the provisions of this

Agreement (including the Development Budget approved hereby), shall not make any

payment to or enter into any arrangement with any "Affiliate" (defined below)

(except on commercially reasonable terms, with an Affiliate possessing

competitive skills and qualifications) and shall otherwise serve the best

interests of Owner at all times. Notwithstanding the foregoing, Owner

acknowledges that Developer shall not be liable for any failure to perform under

this Agreement if and to the extent that Developer is unable to perform based

upon Owner's unwillingness or inability to advance required funds or execute

required documents for such purposes. For purposes of this Agreement, the term

"Affiliate" shall mean with respect to any person, (i) any person who directly

or indirectly through one or more intermediaries controls, is controlled by, or

is under common control with such person, or (ii) any person in which such

person has a twenty-five percent (25%) or more beneficial interest or as to

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