GUARANTY OF LEASE AND LETTER OF CREDIT AGREEMENT

<PAGE>

EXHIBIT: 10.46

GUARANTY OF LEASE

AND LETTER OF CREDIT AGREEMENT

THIS GUARANTY OF LEASE AND LETTER OF CREDIT AGREEMENT (this

"GUARANTY") is executed as of October 7, 2002 by ALTERRA HEALTHCARE CORPORATION,

a Delaware corporation ("GUARANTOR"), in favor of the JER/NHP SENIOR LIVING

ACQUISITION, LLC, a Delaware limited liability company ("LANDLORD").

R E C I T A L S

A. Landlord and ALS LEASING, INC., a Delaware corporation

("TENANT"), have entered into that certain Master Lease of even date herewith

(the "LEASE") whereby Landlord has agreed to lease to Tenant the Premises, as

more specifically set forth in the Lease. All initially capitalized terms used

herein and not otherwise defined herein shall have the meaning ascribed to such

terms in the Lease.

B. Landlord and Tenant have entered into that certain Letter of

Credit Agreement (the "LETTER OF CREDIT AGREEMENT") of even date herewith,

whereby Tenant has agreed to post and maintain a letter of credit as partial

collateral for Tenant's obligations under the Lease, as more particularly set

forth therein.

C. It is a condition to Landlord's obligations under the Lease that

the Guarantor execute and deliver this Guaranty.

A G R E E M E N T S

NOW, THEREFORE, in consideration of Landlord entering into the Lease

with Tenant, and other good and valuable consideration the receipt and

sufficiency of which are hereby acknowledged, Guarantor agrees as follows:

1. GUARANTY.

Guarantor hereby absolutely and unconditionally guarantees to

Landlord the following (collectively, the "GUARANTEED OBLIGATIONS"):

(a) payment in full by Tenant of all Rent (including, without

limitation, Minimum Rent) and other charges, reserves and other amounts

due under the Lease in the manner and at the time prescribed in the Lease;

(b) the full, complete and timely performance by Tenant of all

covenants, indemnities and other obligations under the Lease including,

without limitation, any indemnity or other obligation of Tenant which

survives the expiration or earlier termination of the Lease;

(c) the full, complete and timely performance by Tenant of all

covenants, agreements and other obligations under the Letter of Credit

Agreement;

<PAGE>

(d) the accuracy and truthfulness in all material respects of

all of the representations and warranties made by Tenant under the Lease;

and

(e) all costs of collection or enforcement incurred by

Landlord in exercising any remedies provided for in the Lease or the

Letter of Credit Agreement at law or in equity with respect to the matters

set forth in clauses (a) through (d) inclusive, above.

2. PERFORMANCE BY GUARANTOR.

If any Minimum Rent, other Rent or other charge, reserve or other

amount due under the Lease shall not be paid, or any obligation not performed as

required by the Lease or the Letter of Credit Agreement, then upon demand by

Landlord, Guarantor shall pay within ten (10) days of demand by Landlord such

sums and perform such obligations as required by the Lease or the Letter of

Credit Agreement, as applicable, without regard to:

(a) any defense, set-off, or counterclaim which Guarantor or

Tenant may have or assert;

(b) whether or not Landlord shall have instituted any suit,

action or proceeding or exhausted its remedies or taken any steps to

enforce any rights against Tenant or any other person to collect all or

any part of such sums, either pursuant to the provisions of the Lease, the

Letter of Credit Agreement or at law or in equity (it being understood

that this is a guaranty of payment and not collection, and Guarantor's

liability for such payment shall be primary); or

(c) any other condition or contingency.

Guarantor waives any right of exoneration and any right to require

Landlord to make an election of remedies. Guarantor covenants and agrees that it

shall not cause any default under the Lease or the Letter of Credit Agreement.

3. GUARANTOR'S REPRESENTATIONS AND WARRANTIES.

Guarantor hereby represents and warrants unto Landlord that:

(a) this Guaranty constitutes a legal, valid, and binding

obligation of Guarantor and is fully enforceable against Guarantor in

accordance with its terms;

(b) all the issued and outstanding capital stock of Tenant is

owned beneficially and of record by Guarantor;

(c) Guarantor is a corporation duly organized, validly

existing and in good standing under the laws of the State of Delaware and

is duly authorized and qualified to do all things required of it under

this Guaranty; and

(d) this Guaranty is duly authorized, executed and delivered

by and binding upon Guarantor.

2

<PAGE>

Any material breach by Guarantor of the representations and

warranties set forth herein shall be a default under this Guaranty.

4. WAIVER.

Guarantor hereby knowingly, voluntarily and unequivocally waives:

(a) all notice of acceptance hereof, protest, demand and

dishonor, presentment and demands of any kind now or hereafter provided

for by any statute or rule of law;

(b) any and all requirements that Landlord institute any

action or proceeding, or exhaust any or all of Landlord's rights, remedies

or recourses, against Tenant or anyone else as a condition precedent to

bringing an action against Guarantor under this Guaranty, it being

expressly agreed that the liability of Guarantor hereunder shall be

primary and not secondary;

(c) any defense arising by reason of any disability,

insolvency, bankruptcy, lack of authority or power, death, insanity,

minority, dissolution or any other defense of Tenant, its successors and

assigns, Guarantor or, if applicable, any other guarantor of the

Guaranteed Obligations (even though rendering same void, unenforceable or

otherwise uncollectible), it being agreed that Guarantor shall remain

liable hereon regardless of whether Tenant or any other such person be

found not liable thereon for any reason;

(d) the benefits of any rights and defenses that are or may

become available to Guarantor by reason of Sections 2787 to 2855,

inclusive, 2899 and 3433 of the California Civil Code;

(e) any claim Guarantor might otherwise have against Landlord

by virtue of Landlord's invocation of any right, remedy or recourse

permitted it hereunder, under the Letter of Credit Agreement or under the

Lease or otherwise available at law or equity;

(f) any failure, omission, delay or lack on the part of

Landlord or Tenant to enforce, assert or exercise any right, power or

remedy conferred on Landlord or Tenant in the Lease or this Guaranty or

any action on the part of Landlord granting a waiver, indulgence or

extension to Tenant, Guarantor or any other guarantor;

(g) the voluntary or involuntary liquidation, dissolution,

sale or other disposition of all or substantially all the assets of

Tenant, marshalling of assets or liabilities, receiverships, insolvency,

bankruptcy, assignment for the benefit of creditors, reorganization,

arrangement, composition or readjustment of, or other similar proceeding

affecting Tenant or any of its assets, or the disaffirmance of the Lease

or the Letter of Credit Agreement in any such proceeding;

3

<PAGE>

(h) any release or other reduction of the Guaranteed

Obligations arising as a result of the expansion, release, substitution or

replacement (whether or not in accordance with terms of the Lease) of the

Premises or any portion thereof;

(i) any release or other reduction of the Guaranteed

Obligations arising as a result of the release, substitution, addition or

replacement of any other guarantor or surety of any of the Guaranteed

Obligations.

(j) any release or other reduction of the Guaranteed

Obligations arising as a result of the release, substitution or

replacement (whether or not in accordance with the terms of the Letter of

Credit Agreement) of any letter of credit issued and outstanding pursuant

to the Letter of Credit Agreement; and

(k) any defense or claim available to Guarantor as a result of

Tenant's exercise of its right, or compliance with its obli