BROOKDALE LIVING COMMUNITIES INC, DEF 14A, 2000-04-18

BROOKDALE LIVING COMMUNITIES INC
DEF 14A, 2000-04-18
NURSING & PERSONAL CARE FACILITIES

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement

[_] CONFIDENTIAL, FOR THE USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

BROOKDALE LIVING COMMUNITIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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<PAGE>

[LOGO OF BROOKDALE]

Michael W. Reschke
Chairman of the Board

April 18, 2000

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders (the
"Meeting") of Brookdale Living Communities, Inc. (the "Company") to be held on
Thursday, May 18, 2000 at 10:00 a.m., local time, at 35 West Wacker Drive,
35th Floor, Conference Room A, Chicago, Illinois.

The purpose of the Meeting is to consider and vote upon proposals to (i)
elect two directors, (ii) ratify the appointment of the Company's independent
auditors, (iii) approve the First Amendment to the Company's 1999 Stock
Incentive Plan to increase the number of shares available for issuance under
the plan by an aggregate of 200,000 shares to 400,000 shares and (iv) transact
such other business as may properly come before the Meeting. Additional
information with respect to these matters is set forth in the enclosed Proxy
Statement.

Whether or not you plan to attend the Meeting and regardless of the number of
shares you own, it is important that your shares be represented at the
Meeting. Therefore, after you read the enclosed Proxy Statement, I urge you to
mark, date, sign and promptly return the enclosed Proxy Card to ensure that
your vote will be recorded on the business matters to be considered at the
Meeting.

The Board of Directors appreciates your investment and your interest in the
Company. I look forward to your participation in the Meeting.

/s/ Michael W. Reschke

Michael W. Reschke
Chairman of the Board
<PAGE>

BROOKDALE LIVING COMMUNITIES, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To be held on May 18, 2000

To the Stockholders:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Brookdale Living Communities, Inc., a Delaware corporation (the
"Company"), will be held at 35 West Wacker Drive, 35th Floor, Conference Room
A, Chicago, Illinois, on Thursday, May 18, 2000, at 10:00 a.m., local time, to
consider and take action on the following matters:

1. To elect two Class III directors for a term of three years each;

2. To ratify the appointment of Ernst & Young LLP as independent auditors of
the Company for the fiscal year ending December 31, 2000;

3. To approve the First Amendment to the Company's 1999 Stock Incentive Plan
to increase the number of shares available for issuance under the plan by
an aggregate of 200,000 shares to 400,000 shares; and

4. To transact such other business as may properly come before the Meeting
and at any adjournment(s) thereof.

Stockholders of record at the close of business on April 10, 2000 shall be
entitled to notice of, and to vote at, the Meeting.

By order of the Board of
Directors,

/s/ Robert J. Rudnik

Robert J. Rudnik, Secretary

April 18, 2000

IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE
MARK, DATE AND SIGN YOUR PROXY, AND RETURN IT PROMPTLY IN THE STAMPED
ENVELOPE ENCLOSED FOR YOUR CONVENIENCE.

<PAGE>

Brookdale Living Communities, Inc.
330 North Wabash Avenue
Suite 1400
Chicago, Illinois 60611

----------------

PROXY STATEMENT
FOR THE
2000 ANNUAL MEETING OF STOCKHOLDERS

To be held on May 18, 2000

The enclosed proxy is solicited by and on behalf of the board of directors
(the "Board of Directors" or the "Board") of Brookdale Living Communities,
Inc., a Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders (the "Meeting") to be held at 35 West Wacker Drive, 35th Floor,
Conference Room A, Chicago, Illinois on May 18, 2000 at 10:00 a.m., local
time, and at any adjournments thereof. It is anticipated that this Proxy
Statement will be mailed to stockholders on or about April 18, 2000.

DESCRIPTION OF THE PROXY; PROXY SOLICITATION

If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Meeting, the shares represented thereby
will be voted in accordance with the instructions marked thereon. EXECUTED BUT
UNMARKED PROXIES WILL BE VOTED (I) FOR THE ELECTION OF THE BOARD OF DIRECTORS'
TWO NOMINEES AS CLASS III DIRECTORS FOR A TERM OF THREE YEARS EACH, (II) FOR
THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2000 AND (III)
FOR THE APPROVAL OF THE FIRST AMENDMENT TO THE COMPANY'S 1999 STOCK INCENTIVE
PLAN TO INCREASE THE NUMBER OF SHARES AVAILABLE FOR ISSUANCE UNDER THE PLAN BY
AN AGGREGATE OF 200,000 SHARES TO 400,000 SHARES. If any other matters are
properly brought before the Meeting, the persons named in the accompanying
proxy will vote the shares represented by such proxies on such matters as
determined by a majority of the Board of Directors. The presence of a
stockholder at the Meeting will not automatically revoke such stockholder's
proxy. Stockholders may, however, revoke a proxy at any time prior to its
exercise by filing with the Secretary of the Company a written revocation or a
duly executed proxy bearing a later date or by attending the Meeting and
voting in person.

The cost of solicitation of proxies in the form enclosed herewith will be
borne by the Company. In addition to the solicitation of proxies by mail, the
Company may use the services of its directors, officers and regular employees
to solicit proxies, personally or by telephone. Those persons will not be
compensated specially for such services. The Company will also request that
brokers, banks, custodians, nominees, and fiduciaries holding shares of stock
in their names or the names of their nominees forward proxy material to and
obtain proxies from the beneficial owners of such shares held of record by
such persons. The Company will reimburse such holders for reasonable out-of-
pocket expenses incurred by them in connection with such solicitation. The
Company has retained MacKenzie Partners, Inc., a proxy solicitation firm, to
assist in solicitation of proxies at a fee of $3,000, plus reimbursement of
out-of-pocket expenses.

QUORUM AND VOTE REQUIRED

Only stockholders of record at the close of business on April 10, 2000 (the
"Record Date") are entitled to vote at the Meeting or any adjournment thereof.
A list of all stockholders entitled to vote at the Meeting will be available
for inspection by any stockholder for any purpose reasonably related to the
Meeting during ordinary business hours for a period of 10 days prior to the
Meeting at the Company's principal executive office at 330 North Wabash
Avenue, Suite 1400, Chicago, Illinois. On the Record Date, 9,850,749 shares
(exclusive of 1,724,800 shares of treasury stock) of the
<PAGE>

Company's common stock, par value $0.01 per share ("Common Stock"), were
outstanding. Each share of Common Stock entitles the owner to one vote. The
Company's Restated Certificate of Incorporation does not provide for
cumulative voting in the election of directors.

The presence, in person or by proxy, of stockholders holding a majority of
the outstanding shares of Common Stock will constitute a quorum at the
Meeting. Abstentions and broker non-votes (which occur when a nominee holding
shares for a beneficial owner does not vote on a particular proposal because
the nominee does not have discretionary voting power with respect to that item
and has not received instructions from the beneficial owner) are counted for
purposes of determining the presence or absence of a quorum at the Meeting.
Abstentions are counted in tabulations of the votes cast on proposals
presented to stockholders and, therefore, have the same effect as negative
votes on such proposals by increasing the number of votes cast on such
proposals. Broker non-votes are not counted in tabulations of the votes cast
on proposals presented to stockholders.

A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1999 accompanies this Proxy Statement. THE COMPANY FILED AN
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999 WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "SEC"). STOCKHOLDERS MAY OBTAIN, FREE
OF CHARGE, A COPY OF THE COMPANY'S 1999 ANNUAL REPORT ON FORM 10-K (WITHOUT
EXHIBITS) BY WRITING TO BROOKDALE LIVING COMMUNITIES, INC., 330 NORTH WABASH
AVENUE, SUITE 1400, CHICAGO, ILLINOIS 60611, ATTENTION: INVESTOR RELATIONS.
THE COMPANY WILL PROVIDE COPIES OF THE EXHIBITS TO THE FORM 10-K UPON PAYMENT
OF A REASONABLE FEE.

PRINCIPAL SECURITY HOLDERS OF THE COMPANY

The following table sets forth certain information with respect to beneficial
ownership of the Common Stock as of March 31, 2000 by (i) each person known by
the Company to be the beneficial owner of more than 5% of the Common Stock;
(ii) each director of the Company; (iii) the Chairman of the Board, the
President and Chief Executive Officer and each of the five other persons who
were the most highly compensated executive officers of the Company in 1999
(the "named executive officers"); and (iv) all directors and executive
officers of the Company as a group.

<TABLE>
<CAPTION>
Common Stock
--------------------
Amount and
Nature of Percent
Beneficial of
Name and Address of Beneficial Owner(1) Ownership(2) Class
- -------------------------------------------------------------------------------
<S> <C> <C>
The Prime Group, Inc.(3).................................. 3,929,350 39.9%
Health Partners(4)........................................ 5,479,452 35.7
Delaware Management Holdings, Inc.(5)..................... 952,500 9.7
Goldman Sachs Asset Management(6)......................... 900,900 9.1
Becker Capital Management, Inc.(7)........................ 783,450 8.0
Commonwealth of Pennsylvania, Public School Employees
Retirement System(8)..................................... 629,600 6.4
Michael W. Reschke(9)..................................... 4,022,350 40.5
Mark J. Schulte(10)....................................... 454,958 4.6
Darryl W. Copeland, Jr.(11)............................... 209,500 2.1
Wayne D. Boberg(12)....................................... 8,250 *
Dr. Bruce L. Gewertz(13).................................. 4,950 *
Darryl W. Hartley-Leonard(14)............................. 7,750 *
Robert J. Rudnik(15)...................................... 159,784 1.6
Mark H. Tabak............................................. -- --
Paul H. Warren............................................ -- --
Stephan T. Beck(16)....................................... 19,500 *
Matthew F. Whitlock(17)................................... 20,525 *
R. Stanley Young(18)...................................... 6,500 *
Executive officers and directors as a group (15
persons)(19)............................................. 4,734,567 46.4
</TABLE>

2
<PAGE>

- --------
* Less than 1%.

(1) All of the directors and executive officers of the Company may be contacted
co Brookdale Living Communities, Inc., 330 North Wabash Avenue, Suite 1400,
Chicago, Illinois 60611.

(2) Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, a person has beneficial ownership of any securities as to which
such person, directly or indirectly, through any contract, arrangement,
undertaking, relationship or otherwise has or shares voting power andor
investment power and as to which such person has the right to acquire such
voting andor investment power within 60 days. Percentage of beneficial
ownership as to any person (which includes shares as to which such person
has the right to acquire voting andor investment power within 60 days) as
of a particular date is calculated by dividing the number of shares
beneficially owned by such person by the sum of the number of shares
outstanding as of such date and the number of shares as to which such
person has the right to acquire voting andor investment power within 60
days.

(3) Includes shares of Common Stock held by The Prime Group, Inc. and certain
of its affiliates. Of such shares, 12,500 shares are subject to an option
to purchase held by Blackacre Bridge Capital L.L.C. ("Blackacre") pursuant
to the Stock Option Agreement, dated as of May 7, 1997, between The Prime
Group, Inc. and Blackacre. Pursuant to a letter agreement, dated July 13,
1998, between The Prime Group, Inc. and Mark J. Schulte, Mr. Schulte has
agreed that, in connection with the exercise of Blackacre's option, Mr.
Schulte will transfer 1,250 shares to Blackacre or The Prime Group, Inc.
for 10% of the option price. The address of The Prime Group, Inc. is 77
West Wacker Drive, Suite 4200, Chicago, Illinois 60601.

(4) Health Partners and its affiliates ("HP") beneficially own $100,000,000
principal amount of the Company's 5.5% Convertible Subordinated Notes due
2009, which are presently convertible into 5,479,452 shares of Common
Stock. The address of HP is 54 Thompson Street, New York, New York 10012.

(5) Based on a Schedule 13GA filed with the SEC on February 10, 2000 by
Delaware Management Holdings, Inc. and certain of its affiliates ("DMHI").
The Schedule 13GA indicates that DMHI beneficially owns 952,500 shares of
Common Stock. The address of DMHI is 2005 Market Street, Philadelphia,
Pennsylvania 19103.

(6) Based on a Schedule 13G filed with the SEC on February 9, 2000 by Goldman
Sachs Asset Management, a separate operating division of Goldman Sachs &
Co. ("GSAM"). The Schedule 13G indicates that GSAM (i) is an investment
advisor and (ii) beneficially owns 900,900 shares of Common Stock. GSAM
disclaims beneficial ownership of the shares of Common Stock beneficially
owned by (i) any client accounts with respect to which it or its employees
have voting or investment discretion, or both, and (ii) certain investment
entities, of which its affiliate is the general partner, managing general
partner or other manager, to the extent interests in such entities are
held by persons other than GSAM. The address of GSAM is 1 New York Plaza,
New York, New York 10004.

(7) Based on a Schedule 13G filed with the SEC on February 2, 2000 by Becker
Capital Management, Inc. ("BCMI"). The Schedule 13G indicates that BCMI
beneficially owns 783,450 shares of Common Stock. The Schedule 13G
indicates that the Common Stock is owned by advisory clients of BCMI, and
BCMI disclaims beneficial ownership of the Common Stock. The address of
BCMI is 1211 SW Fifth Avenue, Suite 2185, Portland, Oregon 97204.

(8) Based on a Schedule 13G filed with the SEC on February 15, 2000 by the
Commonwealth of Pennsylvania, Public School Employees Retirement System
("CoP"). The Schedule 13G indicates that CoP beneficially owns 629,600
shares of Common Stock. The address of CoP is 5 North 5th Street,
Harrisburg, Pennsylvania 17101.

(9) Includes 3,929,350 shares of Common Stock held by The Prime Group, Inc.
and certain of its affiliates. Of such 3,929,350 shares, 12,500 shares are
subject to an option to purchase held by Blackacre pursuant to the Stock
Option Agreement, dated as of May 7, 1997, between The Prime Group, Inc.
and Blackacre. Pursuant to a letter agreement, dated July 13, 1998,
between The Prime Group, Inc. and Mark J. Schulte, Mr. Schulte has agreed
that, in connection with the exercise of Blackacre's option, Mr. Schulte
will transfer 1,250 shares to Blackacre or The Prime Group, Inc. for 10%
of the option price. Also includes 93,000 shares issuable upon the
exercise of stock options held by Mr. Reschke that are exercisable as of
or within 60 days of March 31, 2000. Mr. Reschke is the Chairman, Chief
Executive Officer and President of The Prime Group, Inc.

(10) Includes 311,707 shares of Common Stock held directly by Mr. Schulte. Of
such 311,707 shares, Mr. Schulte has agreed to transfer 1,250 shares to
Blackacre or The Prime Group, Inc. in connection with the exercise of
Blackacre's option, pursuant to a letter agreement, dated July 13, 1998,
between The Prime Group, Inc. and Mr. Schulte. Also includes 143,251
shares issuable upon the exercise of stock options held by Mr. Schulte
that are exercisable as of or within 60 days of March 31, 2000.

(11) Includes 12,000 shares of Common Stock held directly by Mr. Copeland and
197,500 shares issuable upon the exercise of stock options held by Mr.
Copeland that are exercisable as of or within 60 days of March 31, 2000.
On December 6, 1999, Mr. Copeland resigned from the Company and entered
into a consulting agreement with the Company. See "Compensation of
Executive Officers--Employment and Consulting Agreements" below. Mr.
Copeland is included herein as a "named executive officer" pursuant to
SEC Regulation S-K, Item 402(a)(3)(iii).

(12) Includes 2,500 shares of Common Stock held directly by Mr. Boberg and
5,750 shares issuable upon the exercise of stock options held by Mr.
Boberg that are exercisable as of or within 60 days of March 31, 2000.

(13) Includes 866 shares of Common Stock held directly by Dr. Gewertz and
4,084 shares issuable upon the exercise of stock options held by Dr.
Gewertz that are exercisable as of or within 60 days of March 31, 2000.

(14) Includes 2,000 shares of Common Stock held directly by Mr. Hartley-
Leonard and 5,750 shares issuable upon the exercise of stock options held
by Mr. Hartley-Leonard that are exercisable as of or within 60 days of
March 31, 2000.

(15) Includes 127,284 shares of Common Stock held directly by Mr. Rudnik and
32,500 shares issuable upon the exercise of stock options held by Mr.
Rudnik that are exercisable as of or within 60 days of March 31, 2000.

(16) Includes 19,500 shares of Common Stock issuable upon the exercise of
stock options held by Mr. Beck that are exercisable as of or within 60
days of March 31, 2000.

3
<PAGE>

(17) Includes 1,025 shares of Common Stock held directly by Mr. Whitlock and
19,500 shares issuable upon the exercise of stock options held by Mr.
Whitlock that are exercisable as of or within 60 days of March 31, 2000.

(18) Includes 6,500 shares of Common Stock issuable upon the exercise of stock
options held by Mr. Young that are exercisable as of or within 60 days of
March 31, 2000.

(19) Includes 4,376,232 shares of Common Stock held directly or indirectly by
executive officers and directors as a group (including 3,929,350 shares
of Common Stock held directly by The Prime Group, Inc. and certain of its
affiliates) and 358,335 shares issuable upon the exercise of stock
options held by executive officers and directors as a group that are
exercisable as of or within 60 days of March 31, 2000.

PROPOSAL NO. 1

ELECTION OF DIRECTORS

The Company's Restated Certificate of Incorporation provides for a minimum of
two directors and a maximum of 11 directors. The Board of Directors currently
consists of eight members. The Board of Directors is divided into three
classes, each class consisting of approximately one-third of the total number
of directors. Class I directors consist of Messrs. Reschke and Warren and Dr.
Gewertz; Class II directors consist of Messrs. Hartley-Leonard, Rudnik and
Tabak; and Class III directors consist of Messrs. Schulte and Boberg. The
Board of Directors proposes the election of two Class III directors at the
Meeting, each to hold office for a three-year term until the 2003 Annual
Meeting of Stockholders and until his successor is duly elected and qualified.
Class I and Class II directors will be elected at the Annual Meetings to be
held in 2001 and 2002, respectively, for three-year terms, and until their
respective successors are duly elected and qualified. It is intended that the
shares of Common Stock underlying the accompanying form of Proxy will be voted
for the nominees for Class III director set forth below, each of whom is
currently a Class III director of the Company. If some unexpected occurrence
should make necessary, in the Board of Directors' judgment, the substitution
of some other person or persons for any of the nominees, shares will be voted
for such other person or persons as the Board of Directors may select. The
Board of Directors is not aware that any nominee may be unable or unwilling to
serve as a director. The following sets forth certain information with respect
to each nominee for Class III director and also with respect to each Class I
and Class II director.

Nominees for Election

Mark J. Schulte. Mark J. Schulte has served as President and Chief Executive
Officer and a director of the Company since May 1997. From January 1991 to May
1997, Mr. Schulte was employed by The Prime Group, Inc. in its Senior Housing
Division, most recently serving as Executive Vice President, with primary
responsibility for overseeing all aspects of The Prime Group Inc.'s Senior
Housing Division. Prior to joining The Prime Group, Inc., Mr. Schulte had 13
years of experience in the development and operation of multi-family housing,
senior housing, senior and assisted living and health care facilities. Mr.
Schulte is licensed to practice law in the State of New York. Mr. Schulte
serves as Chairman of the American Seniors Housing Association, an industry
trade group based in Washington, D.C.

Wayne D. Boberg. Wayne D. Boberg has served as a director of the Company
since May 1997. Mr. Boberg is licensed to practice law in the State of
Illinois and has been a partner of the law firm of Winston & Strawn since
1985, specializing in the representation of corporate clients in connection
with capital transactions and acquisitions.

Directors are elected by a plurality vote (i.e., the two nominees receiving
the greatest number of votes will be elected) of the holders of the shares of
Common Stock present or represented and entitled to vote at the Meeting.

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR REELECTION OF MR.
SCHULTE AND MR. BOBERG AS CLASS III DIRECTORS OF THE COMPANY WITH THREE-YEAR
TERMS EXPIRING IN 2003.

4
<PAGE>

Continuing Class I and Class II Directors

<TABLE>
<CAPTION>
Year Term
Director of Office Served as a
Name Age Class Will Expire Director Since
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael W. Reschke...................... 44 Class I 2001 1997
Bruce L. Gewertz........................ 50 Class I 2001 1997
Paul H. Warren.......................... 43 Class I 2001 1999
Darryl Hartley-Leonard.................. 54 Class II 2002 1997
Robert J. Rudnik........................ 45 Class II 2002 1999
Mark H. Tabak........................... 49 Class II 2002 1999
</TABLE>

Michael W. Reschke. Michael W. Reschke has served as Chairman of the Board
and a director of the Company since May 1997. Mr. Reschke founded The Prime
Group, Inc. in 1981 and, since that time, has served as The Prime Group,
Inc.'s Chairman, Chief Executive Officer and President. For the last 19 years,
Mr. Reschke has directed and managed the development, finance, construction,
leasing, marketing, acquisition, renovation and property management activities
of The Prime Group, Inc. and its affiliates. Mr. Reschke is also a member of
the Board of Directors of Prime Retail, Inc. (NYSE: PRT), a publicly traded
real estate investment trust involved in the ownership, acquisition,
development and management of factory outlet centers and the successor in
interest to the former retail division of The Prime Group, Inc. In addition,
Mr. Reschke is Chairman of the Board and a director of Prime Group Realty
Trust (NYSE: PGE), a publicly traded real estate investment trust involved in
the ownership, acquisition, development and management of office and
industrial buildings and the successor in interest to the former office and
industrial divisions of The Prime Group, Inc. Mr. Reschke is also a member of
the Board of Directors of Horizon Group Properties, Inc. (NASDAQ: HGPI), a
publicly traded corporation involved in the ownership, acquisition,
development and management of factory outlet centers. Mr. Reschke is licensed
to practice law in the State of Illinois and is a certified public accountant.
Mr. Reschke is a member of the Chairman's Round Table and the Executive
Committee of the National Realty Committee, as well as a full member of the
Urban Land Institute. Mr. Reschke also serves on the Board of Visitors of the
University of Illinois Law School.

Dr. Bruce L. Gewertz. Dr. Bruce L. Gewertz has served as a director of the
Company since May 1997. Dr. Gewertz has served as The Dallas B. Phemister
Professor and Chairman, Department of Surgery since 1992, and served as the
first Faculty Dean of Medical Education from 1989 to 1992, at the University
of Chicago Pritzker School of Medicine. Dr. Gewertz is Editor of the Journal
of Surgical Research and serves on the Editorial Board of Annals of Vascular
Surgery.

Paul H. Warren. Paul H. Warren has served as a director of the Company since
May 1999. Mr. Warren co-founded Capital Z Partners in August 1998. From April
1994 to August 1998, Mr. Warren was a partner in Insurance Partners, L.P.
("IP"), a limited partnership organized in 1994 to make investments in
property and casualty insurers, life and health insurers, healthcare services
firms and related insurance businesses. In addition, Mr. Warren serves as a
director of Healthextras, LLC, Corporate Health Dimensions, Provincia Salud,
Provincia A.R.T. and United Payors & United Providers, Inc.

Darryl W. Hartley-Leonard. Darryl W. Hartley-Leonard has served as a director
of the Company since May 1997. Mr. Hartley-Leonard is Chairman of the Board
and Chief Executive Officer of Production Group International, Inc., an event
production agency, Chairman of the Board and Partner of Metropolitan Hotel
Corporation, a hotel company in the long term stay/suite hotel business
directed at the upscale market, a founding partner of H-LK Partners, a hotel
development and management company, and Chairman of the Board and Partner of
Cohabaco Cigar Co., a nationwide cigar distribution company. Mr. Hartley-
Leonard retired as Chairman of the Board of Hyatt Hotels Corporation in 1996
after a 32-year career with Hyatt and its diversified affiliates. Mr. Hartley-
Leonard also serves on the Board of Directors of LaSalle Partners, The United
States Committee for UNICEF and Evanston Northwestern Healthcare.

Robert J. Rudnik. Robert J. Rudnik has served as Executive Vice President,
General Counsel and Secretary of the Company since July 1997 and as a director
of the Company since December 1999. Mr. Rudnik also serves as Executive Vice
President, General Counsel and Secretary of The Prime Group, Inc. Mr. Rudnik
has served in such capacity for The Prime Group, Inc. since 1984. Mr. Rudnik
is licensed to practice law in the State of Illinois and is a member of the
bar in the State of Florida.

5
<PAGE>

Mark H. Tabak. Mark H. Tabak has served as a director of the Company since
May 1999. Mr. Tabak is the Managing Partner of Healthcare Capital Partners and
President and Chief Executive Officer of International Managed Care Advisors,
Inc. From September 1993 to July 1996, Mr. Tabak was the President of AIG
Managed Care Inc., a subsidiary of American International Group. Prior to
joining AIG, he served as President and Chief Executive Officer of Group
Health Plan and he was President of Health America Development Corporation.
Mr. Tabak also founded Clinical Pharmaceuticals, Inc. Mr. Tabak is a member of
the Board of Directors of Ceres Group, Inc., an insurance holding company, ESC
Medical Systems, Ltd., a medical equipment manufacturer, and United Payors &
United Providers, Inc., a health care provider network.

Information Regarding Meetings and Committees of the Board of Directors

The Company's Board of Directors has established an Audit Committee, an
Executive Committee, a Compensation Committee and a Committee of Independent
Directors.

Audit Committee. The members of the Audit Committee consist of Dr. Gewertz
and Messrs. Boberg, Hartley-Leonard and Tabak. The Audit Committee, among
other things, makes recommendations concerning the engagement of independent
auditors, reviews the results and scope of the annual audit and other services
provided by the Company's independent auditors and reviews the adequacy of the
Company's internal accounting controls.

Executive Committee. The members of the Executive Committee consist of
Messrs. Reschke, Schulte and Warren. The Executive Committee has been granted
certain authority to acquire and dispose of real property and the power to
authorize, on behalf of the Board of Directors, the execution of certain
contracts and agreements, including those related to certain borrowings by the
Company. The Executive Committee generally meets monthly (or more frequently
if necessary) and all actions by the committee are reported at the next
meeting of the Board of Directors.

Compensation Committee. The members of the Compensation Committee consist of
Dr. Gewertz and Messrs. Hartley-Leonard and Warren. The Compensation Committee
makes recommendations to the full Board of Directors concerning salary and
bonus compensation and benefits for executive officers of the Company. In
addition, the Compensation Committee has the power and authority to implement
and administer the 1997 Brookdale Living Communities, Inc. Stock Incentive
Plan (the "1997 Stock Incentive Plan"), the 1998 Brookdale Living Communities,
Inc. Stock Incentive Plan (the "1998 Stock Incentive Plan") and the 1999
Brookdale Living Communities, Inc. Stock Incentive Plan (the "1999 Stock
Incentive Plan", and together with the 1997 Stock Incentive Plan and the 1998
Stock Incentive Plan, the "Stock Incentive Plans").

Committee of Independent Directors. The members of the Committee of
Independent Directors consist of Dr. Gewertz and Messrs. Boberg and Hartley-
Leonard. The Committee of Independent Directors was established to consider
and approve or reject, on behalf of the full Board of Directors, any proposed
transactions between the Company and any of its affiliates, stockholders,
directors, officers or employees.

During the fiscal year ended December 31, 1999, the Audit Committee held two
meetings, the Compensation Committee held three meetings, the Committee of
Independent Directors held no meetings and the Board of Directors held six
meetings.

PROPOSAL NO. 2

APPOINTMENT OF INDEPENDENT AUDITORS

The Board of Directors of the Company has selected Ernst & Young LLP as
independent auditors of the Company for the year ending December 31, 2000.
Ernst & Young LLP served in this capacity for the year ended December 31,
1999. A representative of Ernst & Young LLP will attend the Meeting and, while
not intending to make a statement, will respond to appropriate questions
directed to Ernst & Young LLP.

The appointment of auditors is approved annually by the Board of Directors
and subsequently submitted to the stockholders for ratification. The decision
of the Board of Directors is based on the recommendation of the Audit

6
<PAGE>

Committee. The Audit Committee also reviews and approves any proposed non-
audit services to be performed by the independent auditors to ensure that the
provision of such services will not impair the independence of the auditors.

Before making its recommendation to the Board of Directors for appointment of
Ernst & Young LLP, the Audit Committee carefully considered that firm's
qualifications as auditors for the Company. This included a review of its
performance last year, as well as its reputation for integrity and competence
in the fields of accounting and auditing. The Audit Committee has expressed
its satisfaction with Ernst & Young LLP in all of these respects.

The approval by the affirmative vote of the holders of a majority of the
shares of Common Stock present or represented and entitled to vote at the
Meeting is required to ratify the appointment of Ernst & Young LLP as the
Company's auditors. Abstentions will have the same effect as negative votes.

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR RATIFICATION OF
THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE YEAR ENDING DECEMBER 31, 2000.

COMPENSATION OF DIRECTORS

The Company pays its directors who are not employees of the Company a fee for
their services as directors. Such persons receive annual compensation of
$12,000 plus a fee of $1,000 for attendance at each meeting of the Board of
Directors and $500 for attendance at each committee meeting. The members of
the Board receive reimbursement of all travel and lodging expenses related to
their attendance at both Board and committee meetings.

COMPENSATION OF EXECUTIVE OFFICERS

Summary Compensation Table

Prior to the completion of its initial public offering on May 7, 1997, the
Company did not pay any compensation to its officers. The following table sets
forth the compensation earned for the period from May 7, 1997 to December 31,
1997 and for the years ended December 31, 1998 and December 31, 1999 with
respect to the named executive officers.

<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
---------------------- ------------ Other
Name and Principal Position Year Salary Bonus Options Compensation(1)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Michael W. Reschke............ 1999 $133,333 $ 33,867(2) -- --
Chairman of the Board 1998 100,000 -- 18,000(3)(4) --
1997 63,653 -- 100,000(5) --

Mark J. Schulte............... 1999 266,667 93,135(2) 10,000(5) $2,500
President and Chief 1998 275,000 -- 49,500(3)(4) 2,500
Executive Officer
1997 173,937 203 175,000(5) --

Darryl W. Copeland, Jr.(6).....1999..282,917... 84,668(2) 10,000(5) 2,500
Executive Vice President and 1998 250,000 -- 45,000(3)(4) 2,500
Chief Financial
Officer 1997 159,134 150,100(7) 250,000(5) 2,375

Stephan T. Beck............... 1999 158,334 49,851 1,000(3) 2,500
Senior Vice President-- 1998 116,667 52,302 1,000(3) 2,112
Operations
1997 63,252 12,150 25,000(5) 491

Robert J. Rudnik.............. 1999 179,167 30,239(2) -- --
Executive Vice President, 1998 141,667 25,000 35,000(3) --
General Counsel and
Secretary 1997 50,903(8) 217 30,000(5) --

Matthew F. Whitlock........... 1999 191,250 84,550 1,000(3) 2,500
Vice President--Acquisitions 1998 95,000 260,340 1,000(3) 2,500
1997 60,087 116,651 25,000(5) 2,142

R. Stanley Young.............. 1999 214,167 14,167(2) 1,000(3) 2,500
Executive Vice President, 1998 101,846(9) -- 25,000(5) --
Chief Financial Officer and
Treasurer
</TABLE>

7
<PAGE>

- --------
(1) Consists of annual Company matching contributions to the Brookdale Living
Communities, Inc. Retirement Savings Plan.

(2) Consists of amounts of principal and interest forgiven on promissory notes
issued in lieu of bonuses.

(3) Granted pursuant to the 1998 Stock Incentive Plan.

(4) Granted in lieu of a bonus to which the executive officer was entitled
pursuant to his employment agreement.

(5) Granted pursuant to the 1997 Stock Incentive Plan.

(6) On December 6, 1999, Mr. Copeland resigned from the Company and entered
into a consulting agreement with the Company. See "--Employment and
Consulting Agreements" below.

(7) Mr. Copeland received a signing bonus of $150,000 from the Company in May
1997.

(8) Mr. Rudnik joined the Company in July 1997.

(9) Mr. Young joined the Company in August 1998.

Option Grants in 1999

The following table shows all options to purchase Common Stock granted to
each of the named executive officers of the Company in 1999. The table also
shows the potential value of such grants if the Common Stock appreciates at
compounded annual rates of 5% and 10% over the remaining term of the option
from the grant date stock price. The 5% and 10% rates of appreciation based on
the grant date stock price are required to be disclosed by the rules of the
SEC and are not intended to forecast potential future appreciation, if any, in
the price of the Company's Common Stock. The Company did not use an
alternative present value formula permitted by the rules of the SEC because,
in the Company's view, potential future unknown or volatile factors result in
there being no such formula that can determine with reasonable accuracy the
present value of such option grants.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Option Term Based on
Individual Grants Grant Date Stock Price
----------------------------------------------------- ----------------------
Number of Percent of
Shares Total
Underlying Options Granted Exercise
Options to Employees Price Expiration
Name Granted (#) in Fiscal Year ($/Sh)(1) Date 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael W. Reschke...... -- -- -- -- -- --
Mark J. Schulte......... 10,000(2) 9.39% $14.28 05/20/09 $ 89,806 $ 227,586
Darryl W. Copeland, Jr.. 10,000(3) 9.39 14.28 05/20/09 89,806 227,586
Stephan T. Beck......... 1,000(2) 0.94 14.28 05/20/09 8,981 22,759
Robert J. Rudnik........ -- -- -- -- -- --
Matthew F. Whitlock..... 1,000(2) 0.94 14.28 05/20/09 8,981 22,759
R. Stanley Young........ 1,000(2) 0.94 14.28 05/20/09 8,981 22,759
</TABLE>

- --------
(1) Based on the average closing stock price for the five business days
preceding the grant date. The exercise price for the options is generally
payable in cash or, in certain circumstances, by the surrender, at fair
market value on the date on which the option is exercised, of shares of
Common Stock.

(2) Options vest, subject to certain conditions being met, at the rate of 25%
per year over four years following the grant date, commencing on the first
anniversary of the grant date.

(3) As a result of the termination of Mr. Copeland's employment with the
Company on December 6, 1999, all 10,000 options to purchase shares of
Common Stock were forfeited prior to such options becoming exercisable.

8
<PAGE>

Option Exercises and Holdings

The following table sets forth information with respect to options to
purchase shares of Common Stock exercised by the named executive officers
during 1999 and the number of shares of Common Stock underlying options held
by each of the named executive officers and the value of such officers'
exercisable and unexercisable options on December 31, 1999.

<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Shares Options at 1999 In-the-Money Options
Acquired on Year-End (#) at 1999 Year-End ($)(1)
Exercise Value ------------------------- -------------------------
Name (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael W. Reschke...... -- -- 68,000/50,000 $43,750/43,750
Mark J. Schulte......... -- -- 97,002/97,498 41,564/76,561
Darryl W. Copeland,
Jr.(2)................. -- -- 197,500/-- 133,438/--
Stephan T. Beck......... -- -- 12,750/14,250 10,938/10,938
Robert J. Rudnik........ -- -- 23,750/41,250 7,500/7,500
Matthew F. Whitlock..... -- -- 12,750/14,250 10,938/10,938
R. Stanley Young........ -- -- 6,250/19,750 --/--
</TABLE>
- --------
(1) These amounts were calculated by subtracting the exercise price from the
market value of the underlying Common Stock as of 1999 year-end. The
market value of the Common Stock was $12.375 per share as of December 31,
1999 (the last trading date in 1999) based on the closing price per share
on the Nasdaq National Market.

(2) As a result of the termination of Mr. Copeland's employment with the
Company on December 6, 1999, options to purchase 55,109 shares of Common
Stock were forfeited prior to such options becoming exercisable, vested
incentive stock options to purchase 17,391 shares of Common Stock were
cancelled and the exercise date for unvested non-qualified options to
purchase 79,891 shares of Common Stock was accelerated to December 7,
1999.

Employment and Consulting Agreements

The Company has entered into employment agreements with each of Messrs.
Reschke, Schulte and Whitlock. On December 6, 1999, the Company terminated Mr.
Copeland's employment agreement and entered into a consulting agreement with
Mr. Copeland. The agreements with Messrs. Reschke, Schulte and Whitlock (the
"Employment Agreements") generally provide that each shall devote
substantially all of their business time to the operation of the Company,
except that Mr. Reschke is required to devote only such time as he deems
necessary to fulfill his duties and obligations to the Company as Chairman of
the Board. The Employment Agreements for Messrs. Reschke and Schulte provide
for terms expiring on May 7, 2000, while the Employment Agreement for Mr.
Whitlock provides for a term expiring on January 31, 2001. The terms of the
Employment Agreements are automatically extended for one-year terms unless
either the Company or the executive officer provides the other with at least
30 days' prior written notice that such term shall not be extended.

The Employment Agreements with Messrs. Reschke and Schulte provide for an
annual bonus of up to 100% of the base salary based on certain performance
criteria. The Employment Agreement with Mr. Whitlock provides for annual
bonuses based on certain performance criteria. If any of such Employment
Agreements are terminated by the Company "without cause" or, with respect to
Mr. Schulte, due to disability, the executive so terminated will be entitled
to a lump sum payment. With regard to Mr. Whitlock, such lump sum payment will
be an amount equal to six months' base salary. With regard to Messrs. Reschke
and Schulte, such executives will receive a lump sum payment equal to the base
salary for one year plus a pro rata portion of the annual bonus payable under
their respective Employment Agreements. Messrs. Reschke and Schulte may
terminate their respective Employment Agreements and be entitled to
approximately two times their annual compensation and bonus in the event of a
"change in control" of the Company and a material diminution of their
respective duties and responsibilities or compensation. In the event Mr.
Schulte voluntarily terminates his employment with the Company "without good
reason" or in the event the employment of Mr. Schulte is terminated by the
Company "with cause," he will be subject to a non-compete covenant that has a
term of two years. Mr. Reschke is bound by a non-compete agreement among The
Prime Group, Inc. and certain of its affiliates (collectively, "PGI"), the
Company and Mr. Reschke.

The Employment Agreements provide for base salaries of $150,000 for Mr.
Reschke, $350,000 for Mr. Schulte and $200,000 for Mr. Whitlock. The current
terms of compensation for Messrs. Beck, Rudnik and Young include a base salary
of $175,000, $187,500 and $240,000, respectively.

9
<PAGE>

Effective December 6, 1999, Mr. Copeland resigned as Executive Vice President
and Chief Financial Officer of the Company, as a member of the Company's Board
of Directors and as an officer and board member of certain affiliates of the
Company. Also on December 6, 1999, Mr. Copeland entered into a consulting
agreement with the Company (the "Consulting Agreement"). Pursuant to the
Consulting Agreement, Mr. Copeland is an independent contractor of the Company
and has agreed to perform certain duties as directed by the Company. The
Consulting Agreement provides that Mr. Copeland will be compensated at the
annualized rate of $200,000 plus reimbursement to Mr. Copeland for travel
expenses and costs for health care coverage. The Consulting Agreement has an
initial term expiring on May 15, 2000 and will be automatically extended for
successive six-month periods unless the Company or Mr. Copeland delivers a
notice of such party's interest not to extend the Consulting Agreement. Upon
the death or disability of Mr. Copeland, the Consulting Agreement will
terminate. During the term of the Consulting Agreement and for a period of two
years after its expiration or termination, Mr. Copeland has agreed not to
compete with the Company.

In addition, in connection with his resignation and the execution of the
Consulting Agreement, the Company accelerated the vesting date of unvested
non-qualified options to purchase 79,891 shares of Common Stock, and Mr.
Copeland agreed to cancel vested incentive stock options to purchase 17,391
shares of Common Stock. All of Mr. Copeland's remaining unvested options to
purchase 55,109 shares of Common Stock were forfeited upon his resignation.
Under the 1997 Stock Incentive Plan and the 1998 Stock Incentive Plan,
pursuant to which Mr. Copeland's remaining vested non-qualified stock options
were granted, Mr. Copeland has until December 7, 2000 to exercise his vested
stock options to purchase shares of Common Stock.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Board of Directors, which is composed
entirely of non-employee directors, is charged with determining compensation
for the Company's executive officers. Dr. Bruce L. Gewertz and Messrs. Darryl
W. Hartley-Leonard and Paul H. Warren currently serve on the Compensation
Committee.

During the year ended December 31, 1999, no executive officer of the Company
served as a member of (i) the compensation committee of another entity, one of
whose executive officers served on the Company's Compensation Committee, (ii)
the Board of Directors of another entity, one of whose executive officers
served on the Company's Compensation Committee, or (iii) the compensation
committee of another entity, one of whose executive officers served as a
member of the Company's Board of Directors.

REPORT OF COMPENSATION COMMITTEE

The Compensation Committee makes recommendations to the full Board of
Directors concerning salary and bonus compensation and benefits for executive
officers of the Company. In addition, the Compensation Committee has the power
and authority to implement and administer the Company's Stock Incentive Plans.
The current members of the Compensation Committee are Dr. Gewertz and Messrs.
Hartley-Leonard and Warren.

The purpose of the Company's executive compensation programs is to attract
and retain highly qualified individuals while providing the economic incentive
necessary to achieve the Company's performance goals. The Company intends to
maintain executive compensation policies, plans and programs that will reward
executive officers, provide incentives for the achievement of the Company's
operating and financial objectives and, consequently, maximize stockholder
value. The Compensation Committee believes that, through their ownership of
equity interests in the Company (through ownership of Common Stock and
options), the financial interests of the Company's executive officers are
closely aligned with the financial interests of the Company's stockholders.

While the Compensation Committee will continue to evaluate the executive
compensation practices of the Company's industry peer group as an important
factor in determining executive compensation, the Company's achievement of its
performance goals and the contribution of executive officers to such
achievement will greatly influence whether the Company's compensation programs
remain at or exceed the median of its peer group. The peer group of companies
identified by the Compensation Committee is further described in the
Performance Graph presented below in this Proxy Statement.

10
<PAGE>

The Company's executive compensation programs consist of the following
components:

(a) employment agreements with certain of its most senior executive officers
setting base salaries at fixed levels, subject to discretionary increases
determined by the Compensation Committee, and containing such other
provisions sufficient to attract and retain executive officers capable of
contributing to the Company's performance objectives;

(b) annual performance bonuses based on certain performance criteria;

(c) stock options with scheduled vesting periods to align the interests of
the executive officers with those of the Company's stockholders; and

(d) participation in other benefit programs generally available to Company
employees.

Base Salaries

The Company has entered into Employment Agreements with Messrs. Reschke, the
Chairman of the Board of the Company, Schulte, the President and Chief
Executive Officer of the Company, and Whitlock, the Vice President-
Acquisitions of the Company. Pursuant to such agreements, the base salaries of
Messrs. Reschke and Schulte for the period from January 1, 1999 to April 24,
1999 were $100,000 and $275,000, respectively. For the period from April 25,
1999 to December 31, 1999, the base salaries of Messrs. Reschke and Schulte
were $150,000 and $350,000, respectively. Pursuant to his Employment
Agreement, Mr. Whitlock's base salary for the periods January 1, 1999 to
January 31, 1999 and February 1, 1999 to December 31, 1999 was $95,000 and
$200,000, respectively. The Employment Agreement for Mr. Copeland was
terminated as of December 6, 1999, and Mr. Copeland entered into the
Consulting Agreement as of such date. See "Compensation of Executive
Officers--Employment and Consulting Agreements." As provided in the Employment
Agreements, annual base salary increases may be made at the discretion of the
Compensation Committee based on individual performance reviews.

Other elements of the Employment Agreements that serve to retain such senior
executive officers include non-competition provisions that under certain
circumstances extend for a specified time beyond the term of employment. The
Employment Agreement of Mr. Schulte generally prohibits Mr. Schulte from
directly or indirectly competing with the business of the Company during the
term of employment and for a two-year period after termination "with cause" by
the Company or termination "without good reason" by Mr. Schulte. See
"Compensation of Executive Officers--Employment and Consulting Agreements"
above. Mr. Reschke is bound by the non-compete agreement among PGI, the
Company and Mr. Reschke. The Consulting Agreement of Mr. Copeland prohibits
Mr. Copeland from directly or indirectly competing with the business of the
Company during the term of the agreement and for a two-year period after
termination or expiration.

Performance Bonuses

Performance bonuses for certain senior executive officers are contained in
their respective Employment Agreements. Messrs. Reschke and Schulte receive
bonuses based on the achievement of the Company's annual business plan as
reflected in the Company's audited financial statements. These bonuses may be
no greater than 100% of the executive officer's base salary. In addition,
Messrs. Reschke and Schulte are eligible for discretionary bonuses of no more
than 20% of their base salary based on corporate or individual performance
goals that may be established by the Board of Directors or the Compensation
Committee from time to time. Mr. Whitlock is entitled to receive a performance
bonus based upon property acquisitions of the Company. All other executive
officers are eligible for performance bonuses based on the achievement of
certain performance goals. Pursuant to these bonus plans, Messrs. Beck and
Whitlock received performance bonuses of $49,851 and $84,550, respectively, in
1999. In lieu of the amounts due to Messrs. Reschke, Schulte, Copeland, Rudnik
and Young under these bonus plans, the Company made loans to each in the
amounts of $56,000, $154,000, $140,000, $50,000 and $23,425, respectively. As
of December 31, 1999, interest and principal payments in amounts equal to
$33,867, $93,135, $84,668, $30,239 and $14,167 were forgiven by the Company
for each of Messrs. Reschke, Schulte, Copeland, Rudnik and Young,
respectively.

11
<PAGE>

Stock Options

On May 20, 1999, the Company granted stock options to each of Messrs.
Schulte, Beck, Whitlock and Young and certain of the other executive officers
and key employees of the Company. Messrs. Schulte, Beck, Whitlock and Young
were granted options to purchase 10,000, 1,000, 1,000 and 1,000 shares of
Common Stock, respectively, under the 1997 Stock Incentive Plan and the 1998
Stock Incentive Plan. The options vest at the rate of 25% per year over four
years following the grant date, commencing on the first anniversary of the
grant date. The Compensation Committee believes the options granted under the
Stock Incentive Plans will continue to align the interests of the Company's
executive officers with those of the Company's stockholders by emphasizing
long-term stock ownership and increases in stockholder value.

Other Benefits

The Company has established the Brookdale Living Communities, Inc. Retirement
Savings Plan (the "401(k) Plan") for all employees of the Company that meet
minimum employment criteria. The 401(k) Plan provides that participants may
defer up to 15% of their eligible compensation on a pre-tax basis subject to
certain maximum amounts. The Company makes matching contributions of 25% of
the employees' contributions to the 401(k) Plan. Employees' contributions vest
immediately, while the Company's contributions vest over five years.

Compensation Deductibility Policy

The Internal Revenue Code of 1986, as amended (the "Code"), limits the
ability of a publicly-held corporation such as the Company to deduct
compensation in excess of $1,000,000 per individual, other than certain
performance-based compensation. It is the Company's policy to take this rule
into account in setting the compensation of its affected executives. The
Company does not expect to be denied any deduction under Section 162(m) of the
Code for compensation paid during its taxable year ended December 31, 1999.
The Stock Incentive Plans were structured with the intention that compensation
attributable to options granted thereunder would not be subject to the Section
162(m) limitation. Based upon Department of Treasury regulations, bonuses
payable to the Company's executives under their present employment agreements
and compensation attributable to options granted under the Stock Incentive
Plans may be considered as compensation subject to the Section 162(m)
limitation. Accordingly, it is possible that in some future year some portion
of the compensation to a Company executive will not be tax deductible under
Section 162(m). This will depend upon the market price of the Company's shares
on the date options are exercised and the number of options exercised in any
one taxable year.

COMPENSATION COMMITTEE

Dr. Bruce L. Gewertz
Darryl W. Hartley-Leonard
Paul H. Warren

12
<PAGE>

PERFORMANCE GRAPH

The following graph compares the cumulative total stockholder return on the
Company's Common Stock from May 2, 1997, the date the Company's Common Stock
began trading on the Nasdaq National Market, through December 31, 1999, with
the cumulative total return of the S&P Composite--500 Stock Index, the Nasdaq
Composite Index, the Russell 2000 Index and the Company's Peer Group (as
defined below*). All stock price performance assumes an initial investment of
$100 on May 2, 1997 and the reinvestment of any dividends.

Comparison of Cumulative Total Return
May 2, 1997 to December 31, 1999

[GRAPHIC OMITTED FOR EDGAR FILING]
December 31,
--------------------------

May 2, 1997 1997 1998 1999
- ------------------------------------------------------------------------------

Brookdale Living Communities, Inc. $100.00 $150.00 $169.56 $107.60
Company's Peer Group $100.00 $139.14 $138.89 $ 37.47
S&P 500 $100.00 $122.56 $157.59 $190.74
Russell 2000 $100.00 $128.56 $125.29 $151.92
NASDAQ Composite Index $100.00 $124.95 $176.07 $318.08
- ------------------------------------------------------------------------------

- --------
* The Company's Peer Group is composed of selected assisted living companies.
These companies are Alterra Healthcare Corporation, American Retirement
Corporation, Assisted Living Concepts, Inc., ARV Assisted Living, Inc.,
Balanced Care Corporation, Carematrix Corporation, Capital Senior Living
Corporation, Emeritus Corporation, Grand Court Lifestyles, Inc., Greenbriar
Corporation, Regent Assisted Living, Inc. and Sunrise Assisted Living, Inc.

13
<PAGE>

PROPOSAL NO. 3

APPROVAL OF THE AMENDMENT TO 1999 STOCK INCENTIVE PLAN

General

The Company established the 1999 Stock Incentive Plan for the purpose of
attracting and retaining directors, executive officers and other key
employees. Each option granted pursuant to the 1999 Stock Incentive Plan shall
be designated at the time of grant as either an "incentive stock option" or as
a "non-qualified stock option." The summary of the 1999 Stock Incentive Plan
set forth below is qualified in its entirety by reference to the text of the
1999 Stock Incentive Plan, a copy of which may be obtained by making a written
request to Brookdale Living Communities, Inc., 330 North Wabash Avenue, Suite
1400, Chicago, Illinois 60611, Attention: Incentive Plan Administrator.

The 1999 Stock Incentive Plan provides for the grant of options ("1999
Options") to purchase a specified number of shares of Common Stock. Currently
under the 1999 Stock Incentive Plan, 200,000 shares of Common Stock are
available for grants. With respect to any optionee during any calendar year,
the maximum number of shares of Common Stock that may be subject to 1999
Options under the 1999 Stock Incentive Plan is 200,000. As of March 1, 2000,
182,900 options to purchase shares were outstanding under the 1999 Stock
Incentive Plan. Participants in the 1999 Stock Incentive Plan, who may be
directors, officers or employees of the Company, its subsidiaries or Company-
owned partnerships or any consultant or adviser who provides substantial and
important service to the Company, will be selected by the Compensation
Committee.

The 1999 Stock Incentive Plan authorizes the Compensation Committee to grant
1999 Options at an exercise price to be determined by it, provided that such
price cannot be less than 100% of the fair market value of the Common Stock on
the date on which the 1999 Option is granted. If, however, an incentive stock
option is to be granted to an employee who owns over 10% of the total combined
voting power of all classes of the Company's stock, then the exercise price
may not be less than 110% of the fair market value of the Common Stock covered
by such 1999 Option on the day it is granted.

Generally, 1999 Options granted under the 1999 Stock Incentive Plan will have
such terms, including vesting schedules, as determined by the Compensation
Committee. Upon a "change in control" (as defined in the 1999 Stock Incentive
Plan), however, all unvested 1999 Options then outstanding, and to the extent
not previously forfeited, will vest. The 1999 Options must be exercised within
10 years from the date of the grant. The rights of any participants to
exercise a 1999 Option may not be transferred in any way other than by will or
applicable laws of descent and distribution.

Under the 1999 Stock Incentive Plan, the Compensation Committee may grant
options with lower exercise prices in substitution for outstanding options
with higher exercise prices. In addition, in the event of certain
extraordinary events, the Compensation Committee may make adjustments in the
aggregate number and kind of shares reserved for issuance, the number and kind
of shares covered by outstanding awards and the exercise prices specified
therein as may be determined to be appropriate.

No Options may be granted under the 1999 Stock Incentive Plan after the 10th
anniversary of the date on which the 1999 Stock Incentive Plan was adopted by
the Board of Directors (March 18, 2009).

Amendment of the 1999 Stock Incentive Plan

The Compensation Committee may from time to time in its discretion, amend or
modify the 1999 Stock Incentive Plan without the approval of the shareholders.
No amendment shall become effective without shareholder approval if such
amendment increases the cost of the 1999 Stock Incentive Plan to the Company.
No amendment may increase the limit imposed on the maximum number of shares of
Common Stock which may be issued upon exercise of the Options, materially
modify participant eligibility requirements, reduce the minimum Option price
requirements or extend the termination date of the 1999 Stock Incentive Plan
without shareholder approval within twelve months before or after the approval
by the Compensation Committee.

14
<PAGE>

Federal Tax Consequences Associated With the 1999 Stock Incentive Plan

The following is a general description of the federal income tax consequences
associated with the 1999 Stock Incentive Plan. It is not intended as a
description of all federal tax consequences, nor does it describe state,
foreign or local tax consequences.

No taxable income is realized by the optionee upon the grant or exercise of an
incentive stock option. However, the exercise of an incentive stock option
increases the optionee's alternative minimum taxable income and may, therefore,
result in alternative minimum tax liability for the optionee. If no disposition
of shares issued to an optionee pursuant to the exercise of an incentive stock
option is made by the optionee within two years from the date of grant or
within one year after the transfer of such shares to the optionee, then (a)
upon sale of such shares, any amount realized in excess of the option price
(the amount paid for the shares) will be taxed to the optionee as a long-term
capital gain and any loss sustained will be a long-term capital loss and (b) no
deduction will be allowed to the Company.

If any share of Common Stock acquired upon the exercise of an incentive stock
option is disposed of prior to the expiration of the two-year and one-year
holding periods described above (a "disqualifying disposition"), generally (a)
the optionee will realize ordinary income in the year of disposition in an
amount equal to the excess (if any) of the fair market value of the shares at
exercise (or, if less, the amount realized on an arm's length sale of such
shares) over the option price thereof, and (b) the Company will be entitled to
a deduction in such amount. Any further gain realized will be taxed as short-
term or long-term capital gain and will not result in any deduction by the
Company.

To the extent incentive stock options to any optionee become exercisable for
the first time in any calendar year for shares having a fair market value
(determined at the date of grant of the option) in excess of $100,000, the
option will be treated for tax purposes as a non-qualified option.

With respect to non-qualified options, no income is realized by the optionee
at the time the option is granted. Generally, (a) at exercise, ordinary income
is realized by the optionee in an amount equal to the difference between the
option price and the fair market value of the shares on the date of exercise,
and the Company receives a tax deduction for the same amount provided it
satisfies certain withholding obligations, and (b) at disposition, appreciation
or depreciation after the date of exercise is treated as either short-term or
long-term capital gain or loss depending on how long the shares have been held.

Proposed Amendment

On February 3, 2000, the Board of Directors authorized, subject to shareholder
approval, a 200,000 increase in the number of shares of Common Stock available
for issuance under the 1999 Stock Incentive Plan, pursuant to the First
Amendment to the 1999 Stock Incentive Plan, a copy of which is attached hereto
as Exhibit A (the "First Amendment"). Upon approval of the First Amendment, the
total number of shares of Common Stock available for issuance under the 1999
Stock Incentive Plan will increase from 200,000 to 400,000.

The Compensation Committee and the Board of Directors approved the increase in
the number of shares of Common Stock available under the 1999 Stock Incentive
Plan as provided in the First Amendment because the Company has determined that
expanding opportunities for meaningful equity participation in the Company will
enable the Company to remain competitive in the retention and recruitment of
qualified employees. The Compensation Committee and the Board have determined
that there may not be sufficient shares of Common Stock currently available
under the 1999 Stock Incentive Plan to meet this goal. The Compensation
Committee intends to continue the Company's policy of subjecting the option
grants to multi-year vesting periods tied to continued employment, which
encourages long-term commitment to the Company.

Based on the $11.0625 closing price of the Company's Common Stock on the
Nasdaq National Market on March 31, 2000, the aggregate market value of the
additional 200,000 shares of Common Stock, issuable upon the exercise of the
additional 1999 Options authorized by the First Amendment, is $2,212,500.

The approval by the affirmative vote of the holders of a majority of the
shares of Common Stock present or represented and entitled to vote at the
Meeting is required to approve the First Amendment to the 1999 Stock Incentive
Plan. Abstentions will have the same effect as negative votes.

15
<PAGE>

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR APPROVAL OF THE
FIRST AMENDMENT TO THE 1999 STOCK INCENTIVE PLAN.

OTHER INFORMATION

Compliance With Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of the ownership and changes in
the ownership (Forms 3, 4 and 5) with the SEC. Officers, directors and
beneficial owners of more than 10% of the Company's stock are required by SEC
regulation to furnish the Company with copies of all such forms that they
file.

Based solely on the Company's review of the copies of Forms 3, 4 and 5 and
the amendments thereto received by it for the period ended December 31, 1999,
or written representations from certain reporting persons that no Forms 5 were
required to be filed by those persons, the Company believes that during the
period ended December 31, 1999, no reportable transactions were reported late
except that (a) Darryl W. Copeland, Jr. reported (i) the sale to the Company
of Mr. Copeland's option to purchase 100,000 shares of Common Stock from The
Prime Group, Inc. and (ii) the sale to the Company of Mr. Copeland's option to
purchase 25,000 shares of Common Stock from Prime Group III, L.P. on December
7, 1999 on a Form 4 filed on February 14, 2000 and (b) Michael W. Reschke
reported the transfer from Prime Group Limited Partnership of 90,035 shares of
Common Stock to an affiliate, Prime Group II, L.P., on January 26, 1999 on a
Form 4 filed on May 10, 1999. With the following exceptions, based solely on
the Company's review of the copies of reports on Form 3, 4 or 5 and the
amendments thereto received by it for the period ended December 31, 1999, no
reports on Form 3, 4 or 5 required to be filed for such period were late other
than one Form 4 filed by each of Michael W. Reschke and Darryl W. Copeland,
Jr. and one Form 3 filed by each of John Mertz, Katherine Erickson, Mark H.
Tabak and Paul H. Warren.

Certain Relationships and Related Transactions

Management Agreement. On May 7, 1997, the Company entered into a management
agreement with an affiliate of The Prime Group, Inc. ("Owner") with respect to
the Island on Lake Travis facility. The term of the management agreement has
been automatically renewed to April 30, 2001 and automatically renews on an
annual basis unless and until terminated. The Company is paid a monthly fee of
5.0% of the gross revenues of such facility for each month and reimbursement
of expenses. The management agreement may be terminated by Owner only for
cause as set forth in the management agreement during its initial term and
upon 60 days' advance written notice at any time after the expiration of the
initial term or any renewal term. The Company may terminate the management
agreement at any time upon 60 days' advance notice.

Office Lease. On September 25, 1997, the Company entered into a five-year
lease (the "Office Lease"), which commenced October 1, 1997, for its corporate
office with 77 West Wacker Limited Partnership (the "Landlord"), a partnership
which is currently owned by Prime Group Realty Trust, the publicly traded
successor of the office and industrial divisions of The Prime Group, Inc. The
original Office Lease provided for the lease by the Company of approximately
13,500 square feet of office space on the 48th floor, with base rent of $18.50
per square foot escalating at $0.75 per square foot at each anniversary of the
commencement date. On October 2, 1997, in connection with the signing of the
Office Lease, the Company received a $404,000 cash payment from the Landlord
for tenant improvements which are amortized over the term of the Office Lease.

On March 17, 1998, the Company and the Landlord amended the Office Lease,
pursuant to which the Company and the Landlord agreed (i) to relocate the
Company's corporate office from the 48th floor to the 44th floor effective
April 24, 1998, (ii) to increase the space leased by the Company to
approximately 22,600 square feet and (iii) to extend the term of the Office
Lease until April 30, 2005. The base rent under the amended Office Lease
continued to be $18.50 per square foot, escalating $0.75 per square foot on
each May 1 of the term commencing May 1, 1999. In consideration

16
<PAGE>

for executing the amendment of the Office Lease, the Company received a
$452,000 cash payment from the Landlord for tenant improvements which are
amortized over the term of the amended Office Lease.

On September 30, 1999, the Office Lease was amended, and the Office Lease was
terminated effective February 29, 2000. Also on September 30, 1999, the
Company entered into a ten year office lease for approximately 30,000 square
feet of new corporate office space in a building owned by a partnership
controlled by Prime Group Realty Trust. The operating lease provides for the
payment of approximately $2,100,000 to the Company to pay certain tenant
improvement costs and requires the payment of base rent at $16.50 per square
foot, escalating $0.75 per square foot on each March 1 of the term commencing
March 1, 2000, plus operating expenses (as defined in the office lease). As of
March 1, 2000, the Company's corporate office is located at 330 North Wabash
Avenue, Suite 1400, Chicago, Illinois 60611 (and was formerly located at 77
West Wacker Drive, Suite 4400, Chicago, Illinois 60601).

Insurance Brokerage and Risk Management Services with Thilman & Filippini,
LLC. The Company has an ongoing business relationship with respect to
insurance brokerage and risk management services with Thilman & Filippini,
LLC, a limited liability company in which Thomas W. Filippini is an indirect
member. Mr. Filippini is the brother-in-law of Robert J. Rudnik, a Board
member and Executive Vice President, General Counsel and Secretary of the
Company. Thilman & Filippini, LLC receives commissions and fees in connection
with the payment by the Company of premiums on certain of its insurance
policies arranged on behalf of the Company and in connection with providing
certain risk management services for the Company.

Convertible Subordinated Notes due 2009. On May 14, 1999, the Company closed
the sale of $100,000,000 principal amount of its 5.5% Convertible Subordinated
Notes due 2009 (the "Notes") in a private placement pursuant to a Note
Purchase Agreement, dated as of April 27, 1999, between the Company and Health
Partners, an investment vehicle sponsored by Capital Z Financial Services Fund
II, L.P. ("Cap Z"). The Notes are convertible at any time into shares of
Common Stock at an initial conversion price of $18.25 per share.

Pursuant to a Stockholders Agreement entered into in connection with the
private placement of the Notes, the Company appointed to the Board Paul H.
Warren, a partner of Cap Z, as a Class I director, and Mark H. Tabak, a
partner of Health Partners, as a Class II director.

Other Transactions. Wayne D. Boberg, a director of the Company, is a partner
of the law firm of Winston & Strawn, which has provided, and continues to
provide, legal services to the Company. As of the date of this Proxy
Statement, Mr. Boberg owns 2,500 shares of Common Stock and has options to
acquire an additional 8,000 shares of Common Stock.

Transactions between the Company and its officers, directors, stockholders
and their affiliates require the approval of the Committee of Independent
Directors of the Board of Directors.

STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING

Proposals of stockholders intended to be presented at the 2001 Annual Meeting
of Stockholders must be received by the Company no later than December 19,
2000 pursuant to the proxy soliciting rules of the SEC in order to be
considered for inclusion in the Company's Proxy Statement and form of Proxy
related to the 2001 annual meeting. Nothing in this paragraph shall be deemed
to require the Company to include in its Proxy Statement and Proxy relating to
the 2001 annual meeting any stockholder proposal that may be omitted from the
Company's proxy materials pursuant to applicable regulations of the SEC in
effect at the time such proposal is received. Pursuant to the Company's
Amended and Restated By-laws, any stockholder of the Company who intends to
present a proposal for action at the 2001 annual meeting also must file a copy
thereof with the Secretary of the Company at least 60 days prior to the
meeting; however, in the event that less than 75 days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be received no later than the close of
business on the 15th day following the day on which such notice of the date or
public disclosure was made.

17
<PAGE>

OTHER BUSINESS

The Board of Directors knows of no business that will be presented for
consideration at the Meeting other than the matters described in this Proxy
Statement. If any other matter should be presented at the Meeting for action,
the persons named in the accompanying proxy card will vote such proxy in
accordance with the determination of a majority of the Company's Board of
Directors.

Robert J. Rudnik

/s/ Robert J. Rudnik

Secretary

Chicago, Illinois
April 18, 2000

18
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EXHIBIT A

FIRST AMENDMENT TO
BROOKDALE LIVING COMMUNITIES, INC.
1999 STOCK INCENTIVE PLAN
(*New material underlined. **Material to be deleted shown as stricken.)
***

3.1 Stock Subject to Plan

The stock subject to an Option shall be shares of the Company's Common Stock.
The aggregate number of such shares which may be issued upon exercise of
Options granted under Section 4 of the Plan shall not exceed **200,000 *400,000
unless and until a larger number shall have been approved by the Company's
stockholders pursuant to Section 7.6.

***
<PAGE>

-- --

BROOKDALE LIVING COMMUNITIES, INC.

PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 18, 2000

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder hereby appoints Michael W. Reschke, Mark J.
Schulte and Robert J. Rudnik, and each of them, as proxies with full power of
substitution, to represent and to vote as designated below all of the shares
of Common Stock, par value $0.01 per share, of Brookdale Living Communities,
Inc. which the undersigned stockholder is entitled to vote at the Annual
Meeting of Stockholders (the "Annual Meeting") to be held on May 18, 2000 at
10:00 a.m., local time, at 35 West Wacker Drive, 35th Floor, Conference Room
A, Chicago, Illinois, and at any adjournments thereof, upon the following
matters:

This proxy will be voted as directed by the undersigned stockholder. UNLESS
CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES LISTED IN PROPOSAL 1, FOR PROPOSAL 2, FOR PROPOSAL 3 AND IN
ACCORDANCE WITH THE RECOMMENDATIONS OF A MAJORITY OF THE BOARD OF DIRECTORS AS
TO OTHER MATTERS.

PLEASE VOTE, SIGN EXACTLY AS NAME APPEARS ABOVE, DATE AND RETURN
THIS PROXY PROMPTLY USING THE ENCLOSED POSTAGE PAID ENVELOPE.

(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)

<PAGE>

---- BROOKDALE LIVING COMMUNITIES, INC. ----
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]

[ ]

1. To elect two Class III directors for a term of three years each.

Nominees: Mark J. Schulte
Wayne D. Boberg

For All Withhold All For All Except
[_] [_] [_]

________________________________________________________________________________
Nominee Exception(s)

2. To ratify the appointment of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending December 31, 2000.

For Against Abstain
[_] [_] [_]

3. To approve the First Amendment to the 1999 Stock Incentive Plan to add
200,000 shares of Common Stock to the Plan.

For Against Abstain
[_] [_] [_]

The undersigned stockholder hereby acknowledges receipt from the Company of
its Notice of Annual Meeting and Proxy Statement dated April 18, 2000 and
hereby revokes any proxy or proxies heretofore given. This proxy may be revoked
at any time prior to its exercise.

If you receive more than one proxy card, please date, sign and return all
cards in the accompanying envelope.

Dated: _________________________________________________________________ , 2000

Signature(s)___________________________________________________________________

_______________________________________________________________________________
Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporate name
by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.

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