FORUM GROUP INC, SC 14D1, 1995-10-02

FORUM GROUP INC
SC 14D1, 1995-10-02
SOCIAL SERVICES

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14D-1
TENDER OFFER STATEMENT
(Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934)
and
Amendment**
to
SCHEDULE 13D

FORUM RETIREMENT PARTNERS, L.P.
(Name of Subject Company)

FORUM GROUP, INC.
(Bidder)

Preferred Depositary Units
Representing 349 851 105
Preferred Limited Partners' (CUSIP Number of Class of
Interests Securities)
(Title of Class of
Securities)

Dennis L. Lehman
Senior Vice President and Chief Financial Officer
Forum Group, Inc.
11320 Random Hills Road
Fairfax, Virginia 22030
(703) 277-7000

(Name, Address and Telephone Number of Persons Authorized to Receive
Notices and Communications on Behalf of the Persons Filing Statement)

Copies to:

Robert A. Profusek, Esq.
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
(212) 326-3800

October 2, 1995
(Date Tender Offer First Published, Sent or Given to Security Holders)
This statement is filed in connection with a tender offer.

Calculation of Filing Fee
================================================================================
Transaction valuation Amount of Filing Fee
- --------------------------------------------------------------------------------
$14,643,642.50* $2,928.73
================================================================================

*
For purposes of calculating fee only. This amount assumes the purchase
of 5,857,457 preferred depositary units representing preferred limited
partners' interests in Forum Retirement Partners, L.P., at $2.50 net in
cash per unit. The amount of the filing fee calculated in accordance
with Regulation 240.0-11 of the Securities Exchange Act of 1934 equals
1/50 of 1% of the value of the units to be purchased.

[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2).
__________
** This Schedule constitutes Amendment No. 7 to the Schedule 13D originally
filed by Forum Group, Inc. on August 24, 1993.

Page 1 of 92 Pages
Exhibit Index on Page 9

<PAGE>

14D-1
CUSIP No. 349 851 105 Page 2 of 92 Pages

================================================================================

1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

Forum Group, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]

- --------------------------------------------------------------------------------
3 SEC USE ONLY

- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*

WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) [ ]

- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION

Indiana

- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON

9,427,791
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES* [ ]

- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)

61.7%

- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON

CO
================================================================================

*SEE INSTRUCTIONS BEFORE FILLING OUT!

-2-

<PAGE>

14D-1
CUSIP No. 349 851 105 Page 3 of 92 Pages

================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

Forum A/H, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]

- --------------------------------------------------------------------------------
3 SEC USE ONLY

- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*

AF WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) [ ]

- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION

Delaware

- --------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON

9,427,791
- --------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES* [ ]

- --------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)

61.7%

- --------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON

================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!

-3-

<PAGE>

This Schedule 14D-1 Tender Offer Statement and amendment to
Schedule 13D (this "Statement") relates to a tender offer by Forum Group,
Inc., an Indiana corporation (the "Purchaser"), to purchase any and all of
the outstanding preferred depositary units (the "Units") representing
preferred limited partners' interests in Forum Retirement Partners, L.P., a
Delaware limited partnership (the "Partnership"), at $2.50 per Unit, net to
the seller in cash, on the terms and subject to the conditions set forth in
the Purchaser's Offer to Purchase dated October 2, 1995 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which together
constitute the "Offer"), and is intended to satisfy the reporting
requirements of Section 14(d) of the Securities Exchange Act of 1934, as
amended. Copies of the Offer to Purchase and the related Letter of
Transmittal are filed as Exhibits (a)(1) and (a)(2), respectively, hereto.

Item 1. Security and Subject Company.

(a) The name of the subject company is Forum Retirement Partners,
L.P., and the address of its principal executive offices is 11320 Random
Hills Road, Suite 400, Fairfax, Virginia 22030.

(b) The class of the securities to which this Statement relates is
the Partnership's preferred depositary units representing preferred limited
partners' interests. The information set forth in "Introduction" in the
Offer to Purchase is incorporated herein by reference.

(c) The information set forth in "Special Factors -- Market Prices for
Units" in the Offer to Purchase is incorporated herein by reference.

Item 2. Identity and Background.

(a)-(d) and (g) The information set forth in "Introduction" and
"Certain Information Concerning the Purchaser" in the Offer to Purchase is
incorporated herein by reference.

(e)-(f) During the last five years, neither of the persons filing
this Statement nor, to their knowledge, any of the persons listed on
Annex C or Annex D to the Offer to Purchase (i) has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors)
or (ii) was a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations
of, or prohibiting activities subject to, Federal or state securities laws
or finding any violation of such laws.

Item 3. Past Contacts, Transactions or Negotiations with the Subject
Company.

(a)-(b) The information set forth in "Special Factors -- Certain
Determinations by the Purchaser," "Special Factors -- Interests of Certain
Persons in the Offer," and "Background of the Offer" in the Offer to
Purchase is incorporated herein by reference.

Item 4. Source and Amount of Funds or Other Consideration.

(a) The information set forth in "The Offer -- Sources and Amount of
Funds" in the Offer to Purchase is incorporated herein by reference.

(b)-(c) Not applicable.

Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.

(a)-(g) The information set forth in "Introduction," "Special
Factors -- Expansion Program," "Special Factors -- Certain Other Plans for
the Partnership after the Offer," and "Special Factors -- Certain Effects of
the Offer" in the Offer to Purchase is incorporated herein by reference.

-4-

<PAGE>

Item 6. Interest in Securities of the Subject Company.

(a)-(b) The information set forth in "Introduction," "Special
Factors -- Interests of Certain Persons in the Offer," "Background of the
Offer," and "Certain Information Concerning the Purchaser" in the Offer to
Purchase is incorporated herein by reference.

Item 7. Contracts, Arrangements, Understandings or Relationships with
Respect to the Subject Company Securities.

The information set forth in "Introduction," "Special Factors --
Interests of Certain Persons in the Offer," "Background of the Offer," and
"Certain Information Concerning the Purchaser" in the Offer to Purchase is
incorporated herein by reference.

Item 8. Persons Retained, Employed or to be Compensated.

The information set forth in "The Offer -- Fees and Expenses" in the
Offer to Purchase is incorporated herein by reference.

Item 9. Financial Statements of Certain Bidders.

Not applicable.

Item 10. Additional Information.

(a) The information set forth in "Special Factors -- Interests of
Certain Persons in the Offer" in the Offer to Purchase is incorporated
herein by reference.

(b)-(c) The information set forth in "The Offer -- Certain Legal
Matters" in the Offer to Purchase is incorporated herein by reference.

(d) The information set forth in "Special Factors -- Certain Effects
of the Offer" in the Offer to Purchase is incorporated herein by reference.

(e)-(f) Not applicable.

Item 11. Material to be Filed as Exhibits.

(a) (1) Offer to Purchase dated October 2, 1995

(2) Letter of Transmittal

(3) Notice of Guaranteed Delivery

(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies, and Other Nominees

(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies, and Other Nominees

(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9

(7) Text of Press Release issued by the Purchaser on September
25, 1995

(8) Letter dated October 2, 1995 from the Purchaser to
Unitholders

(b) Not applicable

-5-

<PAGE>

(c) (1) Amended and Restated Agreement of Limited Partnership, dated
as of December 29, 1986, of the Partnership, as amended

(2) Depositary Agreement, dated as of December 29, 1986, by and
among the Partnership, Forum Retirement, Inc., the general
partner of the Partnership, as general partner and
attorney-in-fact of the limited partners, Manufacturers
Hanover Trust Company (which subsequently assigned its
interest thereunder to American Stock Transfer & Trust
Company) and all holders from time to time of depositary
receipts

(3) Recapitalization Agreement, dated as of October 6, 1994, by
and between the Purchaser and the Partnership

(4) Letter Agreement, dated December 14, 1993, by and among the
Purchaser, Forum A/H, Inc. and the Partnership

(5) Management Agreement, dated as of December 29, 1986 (the
"Management Agreement"), by and among the Partnership, Forum
Retirement Operations, L.P. ("Operations"), Forum Health
Partners 1-A, L.P., Foulk Manor Partners, L.P., and the
Purchaser

(6) First Amendment to the Management Agreement, dated as of
September 20, 1986

(7) Second Amendment to the Management Agreement, dated as of
September 20, 1989

(8) Third Amendment to the Management Agreement, dated as of
May 27, 1992

(9) Fourth Amendment to the Management Agreement, dated as of
November 9, 1993

(10) Option Agreement, dated as of December 29, 1986, by and
among the Purchaser, the Partnership, and Operations

(d)-(f) Not applicable

(g) (1) Powers of Attorney

-6-

<PAGE>

SIGNATURE

After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is
true, complete and correct.

Dated: October 2, 1995

FORUM GROUP, INC.

By Dennis L. Lehman
------------------------------------
Dennis L. Lehman,
Senior Vice President and
Chief Financial Officer

-7-

<PAGE>

SIGNATURE

After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is
true, complete and correct.

Dated: October 2, 1995

FORUM A/H, INC.

By Dennis L. Lehman
------------------------------------
Dennis L. Lehman
Vice President

-8-

<PAGE>

INDEX TO EXHIBITS

Sequentially
Numbered
Exhibits Page
- -------- ------------

(a) (1) Offer to Purchase dated October 2, 1995 . . . . . . . . 11

(a) (2) Letter of Transmittal . . . . . . . . . . . . . . . . . 68

(a) (3) Notice of Guaranteed Delivery . . . . . . . . . . . . . 80

(a) (4) Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees . . . . . . . . . . 82

(a) (5) Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other
Nominees . . . . . . . . . . . . . . . . . . . . . . . 84

(a) (6) Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 . . . . . 86

(a) (7) Text of Press Release issued by the Purchaser
on September 25, 1995 . . . . . . . . . . . . . . . . . 88

(a) (8) Letter dated October 2, 1995 from the Purchaser
to Unitholders . . . . . . . . . . . . . . . . . . . . 90

(c) (1) Amended and Restated Agreement of Limited
Partnership, dated as of December 29, 1986,
of the Partnership, as amended (incorporated by
reference to Exhibit 4(1) to the Partnership's
Registration Statement on Form S-2 (Registration
No. 33-71498), dated November 10, 1993
(the "Form S-2")) . . . . . . . . . . . . . . . . . . . N/A

(c) (2) Depositary Agreement, dated as of December 29,
1986, by and among the Partnership, Forum Retirement,
Inc., the general partner of the Partnership, as general
partner and attorney-in-fact of the limited partners,
Manufacturers Hanover Trust Company (which subsequently
assigned its interests thereunder to American Stock
Transfer & Trust Company) and all holders from time to
time of depositary receipts (incorporated by reference
to Exhibit 10(6) to the Form S-2) . . . . . . . . . . . N/A

(c) (3) Recapitalization Agreement, dated as of October 6,
1994, by and between the Purchaser and the Partnership
(incorporated by reference to Exhibit 10(1) to the
Partnership's Current Report on Form 8-K, dated
October 12, 1993) . . . . . . . . . . . . . . . . . . . N/A

(c) (4) Letter Agreement, dated December 14, 1993, by and
among the Purchaser, Forum A/H, Inc. and the Partnership
(incorporated by reference to Exhibit 2(3) of Amendment
No. 1 to the Form S-2, dated December 21, 1993) . . . . N/A

-9-

<PAGE>

Sequentially
Numbered
Exhibits Page
- -------- ------------

(c) (5) Management Agreement, dated as of December 29, 1986 (the
"Management Agreement"), by and among the Partnership,
Forum Retirement Operations, L.P. ("Operations"), Forum
Health Partners 1-A, L.P., Foulk Manor Partners, L.P., and
the Purchaser (incorporated by reference to Exhibit 10(1)
to the Form S-2) . . . . . . . . . . . . . . . . . . . N/A

(c) (6) First Amendment to the Management Agreement, dated as
of September 20, 1986 (incorporated by reference to
Exhibit 10(2) to the Form S-2) . . . . . . . . . . . . N/A

(c) (7) Second Amendment to the Management Agreement, dated
as of September 20, 1989 (incorporated by reference to
Exhibit 10(3) to the Form S-2) . . . . . . . . . . . . N/A

(c) (8) Third Amendment to the Management Agreement, dated
as of May 27, 1992 (incorporated by reference to
Exhibit 10(4) to the Form S-2) . . . . . . . . . . . . N/A

(c) (9) Fourth Amendment to the Management Agreement, dated
as of November 9, 1993 (incorporated by reference to
Exhibit 10(5) to the Form S-2) . . . . . . . . . . . . N/A

(c) (10) Option Agreement, dated as of December 29, 1986, by
and among the Purchaser, the Partnership, and
Operations (incorporated by reference to Exhibit 2(1)
to the Form S-2) . . . . . . . . . . . . . . . . . . . N/A

(g) (1) Powers of Attorney . . . . . . . . . . . . . . . . . . 91

-10-

Exhibit (a)(1)

Offer to Purchase for Cash
Any and All Outstanding Preferred Depositary Units
Representing Preferred Limited Partners' Interests
in

FORUM RETIREMENT PARTNERS, L.P.
at
$2.50 Net Per Preferred Depositary Unit

by
FORUM GROUP, INC.

- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, OCTOBER 31, 1995,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------

The Offer is not conditioned on any minimum number of Units being
tendered. The Offer is conditioned on, among other things, (i) the absence
of certain litigation, orders, or other legal matters and (ii) the absence
of a material adverse change (or any development involving a prospective
material adverse change) in the business, financial condition, results of
operations, or prospects of Forum Retirement Partners, L.P.. See "The
Offer -- Certain Conditions of the Offer." The purchase of Units pursuant
to the Offer may result in the delisting of the Units from trading on the
American Stock Exchange and the Partnership no longer filing reports and
other information under the Securities Exchange Act of 1934, as amended,
and would reduce the number of Units that might otherwise trade publicly as
well as the number of Unitholders. Any of these effects could adversely
affect the liquidity or prices realizable in sales of the Units following
the completion of the Offer. See "Special Factors -- Certain Effects of the
Offer."

IMPORTANT
Any Unitholder desiring to tender all or any portion of such
Unitholder's Units should either (i) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in
the Letter of Transmittal and mail or deliver it together with the
depositary receipts representing the tendered Units, and any other required
documents, to the Depositary or tender such Units pursuant to the procedure
for book-entry transfer set forth in "The Offer -- Procedures for Tendering
Units" or (ii) request such Unitholder's broker, dealer, commercial bank,
trust company, or other nominee to effect the transaction for such
Unitholder. A Unitholder who has Units registered in the name of a broker,
dealer, commercial bank, trust company, or other nominee must contact that
entity if such Unitholder desires to tender such Units. Any Unitholder who
desires to tender such Unitholder's Units and whose depositary receipts
representing such Units are not immediately available or who cannot comply
with the procedures for book-entry transfer on a timely basis may tender
such Units by following the procedures for guaranteed delivery set forth in
"The Offer -- Procedures for Tendering Units."

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

THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF
THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.

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

October 2, 1995

The Information Agent for the Offer is:

MACKENZIE PARTNERS, INC.

<PAGE>

TABLE OF CONTENTS

Page
----

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

SPECIAL FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Market Prices for Units . . . . . . . . . . . . . . . . . . . . 2
Expansion Program . . . . . . . . . . . . . . . . . . . . . . . 3
Certain Other Plans for the Partnership after the Offer . . . . 5
Certain Determinations by the Purchaser . . . . . . . . . . . . 5
Certain Effects of the Offer . . . . . . . . . . . . . . . . . . 8
Interests of Certain Persons in the Offer . . . . . . . . . . . 9
Certain Litigation against the Purchaser and the General
Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Certain Federal Income Tax Consequences . . . . . . . . . . . . 13

BACKGROUND OF THE OFFER . . . . . . . . . . . . . . . . . . . . . . . 16

THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Terms of the Offer . . . . . . . . . . . . . . . . . . . . . . . 21
Acceptance for Payment and Payment for Units . . . . . . . . . . 22
Procedure for Tendering Units . . . . . . . . . . . . . . . . . 22
Release of Claims . . . . . . . . . . . . . . . . . . . . . . . 25
Withdrawal Rights . . . . . . . . . . . . . . . . . . . . . . . 25
Sources and Amount of Funds . . . . . . . . . . . . . . . . . . 25
Certain Conditions of the Offer . . . . . . . . . . . . . . . . 26
Distributions . . . . . . . . . . . . . . . . . . . . . . . . . 27
Certain Legal Matters . . . . . . . . . . . . . . . . . . . . . 28
Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . 28

CERTAIN INFORMATION CONCERNING THE PARTNERSHIP . . . . . . . . . . . 29
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Financial Information . . . . . . . . . . . . . . . . . . . . . 30

CERTAIN INFORMATION CONCERNING THE PURCHASER . . . . . . . . . . . . 31

MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

ANNEX A -- Consolidated Financial Statements of the Partnership . . A-1
ANNEX B -- Text of Letter dated August 28, 1995 from the
Purchaser to the FRI Board and Attachments thereto . . . B-1
ANNEX C -- Certain Information with Respect to Directors and
Executive Officers of the Purchaser and Forum A/H . . . . C-1
ANNEX D -- Certain Information with Respect to AFG, Forum Holdings,
and Certain Other Persons . . . . . . . . . . . . . . . . D-1

<PAGE>

To the Holders of Preferred Depositary Units
of Forum Retirement Partners, L.P.:

INTRODUCTION

Forum Group, Inc. (the "Purchaser") hereby offers to purchase any and
all of the outstanding preferred depositary units (the "Units")
representing preferred limited partners' interests in Forum Retirement
Partners, L.P., a Delaware limited partnership (the "Partnership"), not now
beneficially owned by the Purchaser at $2.50 per Unit, without interest,
net to the seller in cash (the "Per Unit Price"), on the terms and subject
to the conditions set forth in this Offer to Purchase and the related
Letter of Transmittal (which together constitute the "Offer"). The
Purchaser presently beneficially owns 61.7% of the outstanding Units, and a
wholly owned subsidiary of the Purchaser is the general partner of the
Partnership.

Holders of Units ("Unitholders") who tender their Units will not be
obligated to pay brokerage fees or commissions on the purchase by the
Purchaser of Units pursuant to the Offer. The Purchaser will pay all fees
and expenses of American Stock Transfer & Trust Company, the Depositary for
the Offer (the "Depositary"), and MacKenzie Partners, Inc., Purchaser's
Information Agent (the "Information Agent"), in connection with the Offer.
See "The Offer -- Fees and Expenses."

The Offer is being made for Units only, and not for units representing
preferred limited partners' interests in the Partnership that are not
deposited with American Stock Transfer & Trust Company, in its capacity as
the Partnership's depositary, pursuant to the Depositary Agreement, dated
as of December 28, 1986 (the "Depositary Agreement"), among the
Partnership, Forum Retirement, Inc., the general partner of the Partnership
and a wholly owned subsidiary of the Purchaser (the "General Partner"),
individually and as attorney-in-fact of the limited partners of the
Partnership (the "Limited Partners"), Manufacturers Hanover Trust Company
(which subsequently assigned its interests thereunder to American Stock
Transfer & Trust Company), and all holders from time to time of depositary
receipts representing the Units ("Depositary Receipts"). Although Units
may be withdrawn from deposit in accordance with the Depositary Agreement,
units of preferred limited partners' interests that are not deposited with
the depositary under the Depositary Agreement are generally not
transferable by the holder thereof (except upon death or by operation of
law) and may not be tendered pursuant to the Offer.

As of September 29, 1995, there were 15,285,248 Units (as represented
by Depositary Receipts) outstanding, there were no undeposited units
representing preferred limited partners' interests outstanding, and there
were 873 holders of record of the Units. As of September 29, 1995, the
Purchaser beneficially owned an aggregate of 9,427,791 Units, or 61.7% of
the total number of Units outstanding. To the Purchaser's knowledge,
except as set forth in "Special Factors -- Interests of Certain Persons in
the Offer," none of the directors or executive officers of the Purchaser or
its affiliates beneficially owns any Units. For additional information
regarding the Purchaser and certain of its affiliates and other related
persons, see "Certain Information Concerning the Purchaser."

The purpose of the Offer is for the Purchaser to increase its equity
interest in the Partnership. The Purchaser does not have any present plans
to propose or otherwise seek to effect a merger or other transaction in
which non-tendering Unitholders would have their Units converted into cash
or other consideration, but reserves the right to propose or seek to effect
such a transaction following the completion of the Offer. Assuming that
the Offer results in a substantial increase in the Purchaser's equity
ownership in the Partnership, the Purchaser expects to seek to make
available to the Partnership the capital resources that would permit the
Partnership to accelerate the Partnership's ongoing expansion program and
may also seek to effect other changes in the Partnership's capital

<PAGE>

structure, business, and results of operations. Those changes could affect
the value of an investment in the Partnership. See "Special Factors --
Expansion Program" and "-- Certain Other Plans for the Partnership after the
Offer."

The Purchaser has been informed that the Board of Directors of the
General Partner (the "FRI Board") has established a committee (the "Special
Committee") comprised of James C. Leslie and John F. Sexton, neither of
whom is affiliated with the Purchaser, to evaluate the Offer and that the
Special Committee has retained Robert A. Innamorati & Co. and Vinson &
Elkins, L.L.P. as, respectively, its financial and legal advisors. See
"Background of the Offer" for a discussion of the background of the Offer.
See "Special Factors -- Certain Litigation against the Purchaser and the
General Partner" for a discussion of certain litigation involving, among
other things, the propriety under the Amended and Restated Agreement of
Limited Partnership of the Partnership (as amended, the "Partnership
Agreement") of the composition of the FRI Board. The sale of Units
pursuant to the Offer will be deemed to constitute a release of any rights
the tendering Unitholder may have in respect of such litigation. See "The
Offer -- Release of Claims."

The purchase of Units pursuant to the Offer may result in the
delisting of the Units from trading on the American Stock Exchange (the
"AMEX") and the Partnership no longer filing reports and other information
under the Securities and Exchange Act of 1934, as amended (the "Exchange
Act"), and would reduce the number of Units that might otherwise trade
publicly as well as the number of Unitholders. Any of these effects could
adversely affect, among other things, the liquidity or prices realizable in
sales of the Units following the completion of the Offer. See "Special
Factors -- Certain Effects of the Offer" for a discussion of these and other
possible effects of the Offer.

On September 22, 1995, the last full trading day preceding the public
announcement by the Purchaser of its intention to commence the Offer, the
last reported sales price of the Units on the AMEX was $2.00 per Unit. On
September 29, 1995, the last full trading day preceding the commencement of
the Offer, the last reported sales price of the Units on the AMEX was
$2.375 per Unit. Unitholders are urged to obtain current market quotations
for the Units. See "Special Factors -- Market Prices for Units" and
"-- Certain Determinations by the Purchaser."

Unitholders are urged to read this Offer to Purchase and the related
Letter of Transmittal carefully before deciding whether to tender their
Units pursuant to the Offer.

SPECIAL FACTORS

Market Prices for Units

The Units are traded on the AMEX under the symbol "FRL." Units were
initially sold to the public in 1986 at a price of $12.75 per Unit. The
price per Unit realizable on the AMEX since that time has, in general,
trended down. The following table sets forth the average closing sales
price of the Units on the AMEX for the quarterly periods indicated.

Average Closing
Sales Price
-----------------
1995
----
Quarter ended September 30, 1995 $2.059
Quarter ended June 30, 1995 $2.125
Quarter ended March 31, 1995 $2.285

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Average Closing
Sales Price
-----------------
1994
----
Quarter ended December 31, 1994 $2.388
Quarter ended September 30, 1994 $2.393
Quarter ended June 30, 1994 $2.212
Quarter ended March 31, 1994 $2.385

1993
----
Quarter ended December 31, 1993 $2.238
Quarter ended September 30, 1993 $1.629
Quarter ended June 30, 1993 $1.708
Quarter ended March 31, 1993 $0.903

The following table sets forth the high and low sales prices for the
Units as reported in the consolidated reporting system, for the quarterly
periods indicated.

High Low
---- -----
1995
----
Quarter ended September 30, 1995 $2-3/8 $1-7/8
Quarter ended June 30, 1995 $2-1/4 $2-1/16
Quarter ended March 31, 1995 $2-1/2 $2-1/16

1994
----
Quarter ended December 31, 1994 $2-7/8 $2-1/4
Quarter ended September 30, 1994 $2-3/4 $1-7/8
Quarter ended June 30, 1994 $2-3/4 $1-5/8
Quarter ended March 31, 1994 $2-7/8 $2

1993
----
Quarter ended December 31, 1993 $3-1/16 $1-3/4
Quarter ended September 30, 1993 $2 $1-1/8
Quarter ended June 30, 1993 $2-1/16 $1
Quarter ended March 31, 1993 $1 $11/16

On September 22, 1995, the last full trading day preceding the public
announcement by the Purchaser of its intention to commence the Offer, the
last reported sales price on the AMEX was $2.00 per Unit. On September 29,
1995, the last full trading day preceding the commencement of the Offer,
the last reported sales price on the AMEX was $2.375 per Unit. See also
"-- Certain Determinations by the Purchaser." Unitholders are urged to
obtain current market quotations for the Units.

Although the Units are currently listed for trading on the AMEX, the
number of Units traded on the AMEX has been limited in recent history. See
"-- Certain Effects of the Offer" for a discussion of certain potential
effects of the Offer, including, among others, the potential delisting of
the Units from trading on the AMEX, which could further impair the
liquidity of the Units.

Expansion Program

The Partnership has adopted a program designed to expand the number of
living units at certain of its existing retirement communities ("RC's") and
increase the value of an investment in the Partnership. As stated in the
Partnership's Annual Report on Form 10-K for the year ended December 31,
1994 (the "1994 Form 10-K"):

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<PAGE>

"As previously announced, the Board of Directors of the
General Partner is continuing to analyze the possible expansion
of certain of the Partnership's properties in an effort to
further improve the Partnership's results of operations. A
preliminary study has identified several potentially attractive
expansion opportunities, which could increase the number of
living units owned by the Partnership by approximately 30%, for
an estimated capital expenditure totaling $25 million. Any
expansion would likely modify the uses of or add capacity to
existing facilities without incurring substantial land
acquisition and common area build-out costs. However, any major
expansion or other capital improvement program could require that
the Partnership obtain additional financing and would affect the
Partnership's levels of distributable cash, if any. Furthermore,
such expansions may require additional regulatory approvals and
modification of [certain indebtedness]. There can be no
assurance that the Partnership will adopt or be able to
successfully implement any major expansion or other capital
improvement program, as to the timing thereof or as to the effect
thereof on the Partnership's financial position."

Further study following the foregoing statement has caused the General
Partner to reduce its preliminary estimate of the number of additional
living units that could be added to the Properties. The General Partner's
current estimate of the maximum number of such additional living units is
367, at a total cost estimated to be approximately $20.3 million. For
reasons discussed below, there can be no assurance as to the number of
additional living units that will ultimately be constructed pursuant to the
Partnership's expansion program or as to the timing or cost thereof.

As stated in the Partnership's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995 (the "1995 Second Quarter Form 10-Q"):

"[A]s discussed below, the Partnership is considering certain
possible expansion projects that would require substantial
additional capital. There can be no assurance that the
Partnership will be able to obtain such additional capital.

The partnership is continuing to analyze opportunities for
expanding its existing facilities. To date, approximately $2.2
million has been approved for this program and the approved
projects are currently in progress."

The implementation of the expansion program and its impact on the
value of an investment in the Partnership is subject to a number of
variables, including without limitation the cost and availability of
financing, the timing with respect to obtaining financing, the ability to
obtain required zoning variances and permits from local governmental
authorities and the timing thereof, whether development and construction
costs are higher or lower than anticipated, whether construction is
completed faster or slower than anticipated, whether newly added living
units are leased faster or slower than anticipated, whether rental rates
for additional living units are higher or lower than anticipated, and
whether operating costs are higher or lower than anticipated. The value of
an investment in the Partnership is also subject to other variables, such
as whether or not the Partnership becomes subject to taxation as a
corporation. See "Special Factors -- Certain Federal Income Tax
Consequences."

Through September 29, 1995, the Partnership had expended approximately
$500,000 in connection with the Partnership's expansion program. Actual
construction has been commenced at three of the Partnership's nine RC's
(collectively, the "Properties"). The expansions of the three Properties
under construction are scheduled to be completed by May 1996, and are
expected to result in the addition of an aggregate of 44 additional living
units, at a total cost estimated to be approximately $2.5 million.

Costs of the expansion program are presently being funded out of the
Partnership's cash from operations. If the Purchaser substantially
increases its equity ownership in the Partnership as a result of the Offer
or otherwise, the Purchaser expects to seek to accelerate the
implementation of the Partnership's expansion program. The Purchaser has
sufficient capital resources to invest in or advance to the Partnership
amounts necessary to fund the capital expenditures required to implement
the expansion program. If the Purchaser does not substantially increase

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<PAGE>

its equity ownership in the Partnership, the Purchaser presently intends to
explore whether to make capital available to the Partnership to accelerate
the Partnership's expansion program.

Certain Other Plans for the Partnership after the Offer

The Purchaser does not have any present plans to propose or otherwise
seek to effect a merger or other transaction in which non-tendering
Unitholders would have their Units converted into cash or other
consideration, but reserves the right to propose or seek to effect such a
transaction following the completion of the Offer. However, if the
Purchaser substantially increases its equity ownership in the Partnership
as a result of the Offer or otherwise, the Purchaser expects to seek to
accelerate the implementation of the Partnership's ongoing expansion
program and may also seek to effect other changes in the Partnership's
capital structure, business, and results of operations as described in
"-- Certain Determinations by the Purchaser" and "-- Expansion Program."

The Purchaser does not believe that the Offer gives any right of
appraisal to Unitholders under the Partnership Agreement or the laws of the
State of Delaware.

Certain Determinations by the Purchaser

No person was retained as an unaffiliated representative to act on
behalf of unaffiliated Unitholders for purposes of negotiating the terms of
the Offer, and, as of October 2, 1995, the Special Committee has not
announced whether or not it recommends that Unitholders tender their Units
pursuant to the Offer or whether the Special Committee will remain neutral
with respect to the Offer. The Purchaser has received no report, opinion,
or appraisal from an outside party relating to the consideration or the
fairness of the consideration being offered to Unitholders pursuant to the
Offer or the fairness of the Offer to the Partnership, the Purchaser and
its affiliates, or Unitholders other than the Purchaser and its affiliates,
or which is otherwise materially related to the Offer.

Based on the Purchaser's financial analysis described below and recent
market prices for the Units (see "-- Market Prices for Units"), the
Purchaser believes that the Offer is fair to Unitholders. However, based
upon the investment criteria of the Purchaser, including discount and
capitalization rates, believed by the Purchaser to be most appropriate for
its analysis of the value of an investment in the Units, the Purchaser
believes that the net present value of a long-term investment in the Units
could exceed the Per Unit Price being offered hereby, assuming the
Partnership accelerates and successfully implements its expansion program.
See "-- Expansion Program" for a discussion of certain variables affecting
the implementation of the expansion program. Any analysis of the value of
an investment in the Units is necessarily uncertain, is based in
substantial part on future events, including the Partnership's future
operating performance and the implementation of the expansion program, many
of which are outside the control of the Partnership and the General
Partner, and is heavily dependent upon the particular capitalization and
discount rates and other investment criteria an investor determines to be
appropriate for such investor's analysis. Accordingly, each Unitholder
must make his, her, or its own decision whether to tender Units pursuant to
the Offer and should give careful consideration to the terms of, and
consequences resulting from, the Offer and such other factors as such
Unitholder determines to be relevant. See "-- Certain Effects of the
Offer."

In October 1994, the General Partner developed a budget for the
Partnership's fiscal year ending December 31, 1995, which assumed and
projected the following results of operations for that year:

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<PAGE>
Approved Budget for the
Year ending December 31, 1995
-----------------------------
(Dollars in thousands, except
per Unit amounts)

Total revenues $49,612
Net operating income(a) $7,884
Net income $1,366
Net income per Unit(b) $0.09

_________________

(a) Net operating income is defined as
earnings before interest, taxes,
depreciation, and amortization, less
ordinary annual capital expenditures.

(b) Per Unit data is based on 15,285,000 Units outstanding.

The principal assumptions underlying the 1995 budget are (i) average occupancy
increases to 94.4% for the year ending December 31, 1995, compared to 93.8% for
the prior year and (ii) total revenues increase to $49.6 million for the year
ending December 31, 1995 from $47.3 million for the prior year. The
Partnership's actual results of operations for the six months ended June 30,
1995 and anticipated results of operations for the nine months ended
September 30, 1995 are slightly below those assumed in the development of the
1995 budget. However, that performance does not materially affect the
Purchaser's view of the long-term value of an investment in the Partnership.
The variances between the actual results of operations for the six months ended
June 30, 1995 and those assumed in the development of the 1995 budget are as
follows:

Six Months ended June 30, 1995
-----------------------------------------------
(Dollars in thousands, except per Unit amounts)

Actual Budget Variance
------- -------- ---------

Total revenues $24,611 $24,584 $27
Net operating income(a) $3,645 $3,737 $(92)
Net income (loss) $159 $485 $(326)
Net income (loss) per Unit(b) $0.01 $0.03 $(0.02)
___________________

(a) Net operating income is defined as earnings
before interest, taxes, depreciation, and
amortization, less ordinary annual capital
expenditures.

(b) Per Unit data is based on 15,285,000 Units outstanding.

The Partnership does not as a matter of course publish its business plans
and budgets or make public projections or forecasts of its anticipated financial
position or results of operations. The 1995 budget, which is not publicly
available, was prepared solely for internal use and not with a view to public
disclosure or compliance with published guidelines of the Securities and
Exchange Commission (the "Commission") regarding projections or the guidelines
established by the American Institute of Certified Public Accountants regarding
projections, and information with respect to the 1995 budget is included in this
Offer to Purchase only because such information is available to the Purchaser.
Because the estimates and assumptions underlying the 1995 budget are inherently
subject to significant economic and competitive uncertainties and contingencies,
many of which are beyond the Purchaser's and the Partnership's control, there
can be no assurance that the projected results of operations set forth therein
will be realized. Actual results of operations for the year ending December 31,
1995 may vary significantly from those set forth above. The above information
with respect to the 1995 budget should be read in conjunction with the
assumptions, qualifications, and explanations set forth above, the historical
financial statements of the Partnership and related notes included as Annex A to
this Offer to Purchase, and other information contained elsewhere in this Offer
to Purchase. See "Certain Information Concerning the Partnership -- Financial
Information."

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<PAGE>
At the request of the Executive Committee of the Board of Directors of
the Purchaser, management of the Purchaser performed an analysis of the
potential value of an investment in the Units. This analysis, the
principal variables of which were the capitalization rate applied and the
assumed number of additional living units added to the Properties pursuant
to the Partnership's expansion program, resulted in a hypothetical value
range per Unit of $1.03 to $2.72. This range of hypothetical per Unit
values assumes the Partnership had access to the capital necessary to
permit the acceleration of the implementation of the expansion program and
was determined by (i) estimating the aggregate equity value of the
Partnership assuming no expansions by (A) capitalizing the Partnership's
projected 1995 net operating income (defined as earnings before interest,
taxes, depreciation, and amortization, less ordinary annual capital
expenditures), as adjusted to reflect a normalized capital expenditure rate
of $1,000 per living unit (compared to the estimated 1995 capital
expenditure per living unit of $1,583), of $8,276,258 at alternative
capitalization rates of 11.0%, 12.0%, and 13.0% to determine total
enterprise value, (B) deducting from total enterprise value $49,696,125,
the aggregate principal amount of the Partnership's mortgage indebtedness
as of August 31, 1995, and (C) adding to total enterprise value the
Partnership's available cash, net of working capital requirements and
obligations with respect to security deposits, as of August 31, 1995
(estimated to be $1,771,395) and (ii) estimating the additional equity
value resulting from the addition of living units to the Properties
pursuant to the Partnership's expansion program, assuming alternative
numbers of additional living units of 200, 250, 300, 325, and 367, by
(A) capitalizing the Partnership's average net operating income per living
unit (estimated to be $13,056 in 1999, discounted to current dollars at a
discount rate of 15%), at alternative capitalization rates of 11.0%, 12.0%,
and 13.0% to determine the additional enterprise value and (B) deducting
from additional enterprise value the capital expenditures per unit required
to add the additional units (estimated at an average of $55,050 per living
unit, discounted in the same manner as net operating income per unit). The
following table sets forth the hypothetical range of values determined by
management of the Purchaser based on the foregoing methodology:

Capitalization Rate
--------------------------------------------
11.0% 12.0% 13.0%
------- ------- -------

Hypothetical Values
Assuming No Expansions:
- -----------------------

Hypothetical Enterprise Value $75,238,712 $68,968,820 $63,663,526
Hypothetical Equity Value $27,313,982 $21,044,090 $15,738,796
Hypothetical Per Unit Value(a) $1.79 $1.38 $1.03

Hypothetical Per Unit
Values Assuming Expansions(a):
- ------------------------------

Assumed Number of
Additional Living Units
-----------------------

200 $2.30 $1.81 $1.39
250 $2.43 $1.92 $1.48
300 $2.55 $2.02 $1.58
325 $2.62 $2.08 $1.62
367 $2.72 $2.17 $1.70

____________________

(a) Per Unit data is based on 15,285,000 Units outstanding.
The Purchaser believes that the methodology (including the range of
capitalization rates) and assumptions used in the foregoing analysis are
appropriate for analyzing the value of an investment in the Units. The
Purchaser, however, has recently received appraisals on certain of its own
properties which use an approximately 10.0% capitalization rate. Based on
the differences between the Partnership's RCs and those properties of the
Purchaser to which such appraisals relate, the Purchaser does not believe a
10.0% capitalization rate to be appropriate for analyzing the value

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<PAGE>
of an investment in the Units. If a 10% capitalization rate were used in
the foregoing analysis, the hypothetical per Unit value assuming 367
additional living units would be increased by $0.18.

Since the recapitalization of the Purchaser in 1993, the Purchaser has
performed a number of other analyses with respect to the value of an
investment in the Units. These analyses employed a number of different
methodologies and assumptions which the Purchaser does not believe to be
appropriate at this time and produced a broad range of hypothetical values.
In addition, on August 28, 1995, the Purchaser furnished to the FRI Board a
letter containing an analysis of the possible acquisition of additional
Units by the Purchaser. The analysis contained in such letter included
information regarding historical trading prices for the Units and two
hypothetical valuation cases showing valuations substantially below the
Price Per Unit being offered hereby. The text of the letter and the
attachments thereto are attached as Annex B hereto.

The foregoing analyses do not purport to reflect or constitute an
estimate of realizable present or future values of the Units. Many of the
analytical assumptions upon which the analyses are based are beyond the
control of the Purchaser or the General Partner and there may be material
variations between such assumptions and the actual facts. Accordingly,
such analyses are inherently uncertain and may not be relied upon as a
measure of realizable present or future values of the Units.

Certain Effects of the Offer

The purchase of Units pursuant to the Offer may result in the
delisting of the Units from trading on the AMEX and the Partnership no
longer filing reports and other information under the Exchange Act and
would reduce the number of Units that might otherwise trade publicly as
well as the number of Unitholders. Any of these effects could adversely
affect the liquidity or prices realizable in sales of Units following the
completion of the Offer.

Units represented by Depositary Receipts are currently listed on the
AMEX. Depending upon the aggregate market value of Units not acquired
pursuant to the Offer and the number of Units accumulated by other parties,
the Units may no longer meet the requirements of continued listing on the
AMEX and may be delisted from the AMEX. AMEX-published guidelines indicate
that the AMEX would consider delisting the Units in the event that, among
other things, the number of record holders of 100 or more Units fell below
300, the number of publicly held Units (exclusive of concentrated holdings
and those of officers and directors) fell below 200,000, or the aggregate
market value of the publicly held Units fell below $1.0 million. As of
September 29, 1995, there were 871 holders of record of Depositary
Receipts, representing 5,857,457 Units (exclusive of 9,427,791 Units held
by the Purchaser and its affiliates).

If the AMEX were to delist the Units, it is possible that the Units
would trade on another securities exchange or in the over-the-counter
market and that price quotations for the Units would be reported by such
exchange or by the National Association of Securities Dealers, Inc. or
through the National Association of Securities Dealers Automated Quotation
System or by other sources. The extent of the public market for the Units
and availability of such quotations would depend, however, upon such
factors as the number of holders of Units and the aggregate market value of
the Units remaining publicly held at such time, the interest of securities
firms in maintaining a market in the Units, the possible termination of
registration of the Units under the Exchange Act, as described below, and
other factors.

The Units are currently "margin securities" under the regulations of
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"). Among other things, this has the effect of allowing brokers to
extend credit on the collateral of the Units. Depending upon factors
similar to those described above with respect to listing and market
quotations, following the purchase of Units pursuant to the Offer, it is
possible that the Units would no longer constitute "margin securities" for
purposes of the Federal Reserve Board's margin regulations, in which event
Units could no longer be used as collateral for margin loans made by
brokers.

The Units are currently registered under the Exchange Act. Such
registration may be terminated upon application of the Partnership to the
Commission if the Units are neither listed on a national securities
exchange nor

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<PAGE>
held by 300 or more holders of record of the Units. The termination of the
registration of the Units under the Exchange Act would substantially reduce
the information required to be furnished by the Partnership to the
Unitholders and to the Commission and would render inapplicable certain
provisions of the Exchange Act, including requirements that the Partnership
file periodic reports and furnish Unitholders with proxy materials
regarding meetings of Unitholders of the Partnership, the requirements of
Rule 13e-3 under the Exchange Act with respect to "going private"
transactions, requirements that the General Partner's executive officers
and directors and persons owning more than 10% of the Units outstanding
file certain reports concerning ownership of the Partnership's equity
securities, and provisions that any profit by such executive officers,
directors, and other persons through purchases and sales of the
Partnership's equity securities within any six-month period may be
recaptured by the Partnership. In addition, the ability of "affiliates" of
the Partnership and other persons to dispose of Units which are "restricted
securities" under Rule 144 of the Securities Act of 1933, as amended (the
"Securities Act"), may be impaired or eliminated. If registration of the
Units under the Exchange Act were terminated, the Units would no longer be
"margin securities" or eligible for trading on the AMEX.

Interests of Certain Persons in the Offer

Unitholders should be aware that the Purchaser and the executive
officers and directors of the General Partner have interests that present
them with actual or potential conflicts in connection with the Offer.

Control of the General Partner. The General Partner is and has been a
wholly owned subsidiary of the Purchaser since the Partnership's inception
in 1986. Consequently, the Purchaser has at all times had the ability as a
matter of Delaware corporate law to elect all of the directors of the
General Partner although, pursuant to the Partnership Agreement, at least a
majority of the members of the FRI Board must be persons who are not
directors, officers, employees, affiliates, or greater than 1% shareholders
of the General Partner or any of its affiliates ("Independent Directors").
See "-- Certain Litigation against the Purchaser and the General Partner"
for a discussion of certain litigation involving, among other things, the
propriety under the Partnership Agreement of the composition of the FRI
Board. In addition, Donald J. McNamara, President and Chairman of the
Board of the General Partner, has various relationships with one of the two
investment entities which together control a majority of the Purchaser's
capital stock, and all of the other officers of the General Partner are
also officers of the Purchaser. See "Certain Information Concerning the
Purchaser." As a result of the foregoing circumstances, the Purchaser has
an interest in the Offer that may be deemed to present an actual or
potential conflict of interest.

Ownership of Units. As of September 29, 1995, the Purchaser
beneficially owned an aggregate of 9,427,791 Units, or 61.7% of the total
number of Units outstanding. As of September 29, 1995, Brian C. Swinton,
one of the executive officers of the Purchaser, beneficially owned 9,800
Units; Mr. Swinton shares voting and dispositive power with respect to such
Units with his spouse. To the Purchaser's knowledge, none of the directors
or executive officers of the Purchaser or its affiliates beneficially owns
any Units, except as set forth in the immediately preceding sentence and
except insofar as any of the foregoing persons may be deemed to own
beneficially Units owned by the Purchaser or its affiliates. Neither the
Purchaser nor any of its affiliates will tender any Units pursuant to the
Offer. The Purchaser has been advised by Mr. Swinton that he does not
presently intend to tender his Units pursuant to the Offer. See "Certain
Information Concerning the Purchaser."

Following the completion of the Offer, the Purchaser may at any time,
depending upon market conditions and other factors, acquire additional
Units in open-market purchases, in negotiated transactions, in a subsequent
tender or exchange offer, or otherwise. See "-- Plans for the Partnership
after the Offer."

Management Agreement. The Purchaser manages and operates each of the
Properties pursuant to a long-term management contract entered into in
connection with the formation of the Partnership (as amended, the
"Management Agreement"). See "Certain Information Concerning the
Partnership -- General." The term of the Management Agreement is
coterminous with the term of the Partnership (which continues in existence
until December 31, 2087 or until its earlier termination pursuant to the
terms of the Partnership Agreement) unless the term of the Management
Agreement is sooner terminated as provided therein. Either party may
terminate the

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<PAGE>
Management Agreement upon 30 days' prior written notice if the other party
fails substantially to perform in accordance with the terms thereof through
no fault of the terminating party and if the other party does not cure the
failure within that 30-day period. Additionally, the Management Agreement
provides that the Partnership may terminate the Management Agreement
without cause upon (i) the simultaneous withdrawal or removal of the
General Partner as the general partner of the Partnership and (ii) the
affirmative vote of at least 80% in interest of the Unitholders. As of
September 29, 1995, the Purchaser beneficially owned an aggregate of
9,427,791 Units, or 61.7% of the total number of Units outstanding.
Accordingly, even absent the purchase of additional Units pursuant to the
Offer, the Purchaser has sufficient voting power to prevent any attempt by
Unitholders to remove the General Partner or to terminate the Management
Agreement without cause. In addition, the Management Agreement provides
for the termination of the manager (presently the Purchaser) in certain
circumstances involving monetary defaults under the then-outstanding
indebtedness of the Partnership's affiliated operating partnership which
owns substantially all of the Partnership's assets and the vote of the
holders of at least two-thirds of the principal amount of such
indebtedness. See "Certain Information Concerning the Partnership."

Pursuant to the Management Agreement, the Purchaser is entitled to
receive management fees in respect of the Properties, payable quarterly, in
an amount equal to 8% of the Partnership's gross operating revenues. All
management fees payable since the formation of the Partnership in 1986
through December 31, 1993 were deferred. At December 31, 1993, deferred
management fees totalled approximately $15,780,000. Management fees are no
longer deferrable for periods from and after January 1, 1994 and unpaid
management fees for such periods bear interest at the rate of 12% per
annum. The Purchaser received management fees totalling approximately
$3,767,000 for calendar year 1994 and $1,957,000 for the first six months
of calendar year 1995. Deferred management fees generally will be paid
quarterly at a rate of 50% of any excess revenues of the Partnership, after
the deduction of operating expenses, capital expenditures, provisions for
fixed asset reserves and other reasonable cash reserves, and a provision
for a quarterly distribution at an annual rate of $1.35 per Unit, and after
payment of current management fees. Deferred management fees are also
payable to the Purchaser out of net proceeds to the Partnership from sales
and refinancings of the Partnership's RCs ("Capital Transaction Proceeds")
after making distributions of Capital Transaction Proceeds in an amount
sufficient (i) to meet Limited Partners' tax liabilities, (ii) together
with all prior distributions of Capital Transaction Proceeds, to repay
Limited Partners' capital contributions, and (iii) together with all prior
distributions of Capital Transaction Proceeds and net cash flow, to pay a
12% cumulative, simple annual return on the Limited Partners' respective
unrecovered capital contributions. As of the date of this Offer to
Purchase, the Purchaser has received no payments in respect of deferred
management fees and the Purchaser does not expect to receive any such
payments for the foreseeable future.

In the event of the termination of the Management Agreement in
accordance with the terms thereof, whether in connection with the removal
or withdrawal of the General Partner or otherwise, the Purchaser would be
entitled immediately upon termination to receive all unpaid management fees
(plus interest thereon as described above) for prior periods, including
without limitation any deferred management fees, together with any
reimbursements then due to it under the Management Agreement. Such fees
would be due regardless of the levels of distribution made to holders of
Units and would constitute a liability of the Partnership (and therefore be
entitled to priority over equity interests upon the liquidation of the
Partnership unless the Management Agreement is terminated (and then only in
certain circumstances)).

See "-- Certain Litigation against the Purchaser and the General
Partner" with respect to certain allegations made as to the amounts of
management fees payable under the Management Agreement.

Option Agreement. Pursuant to an option agreement (the "Option
Agreement") entered into at the time of the Partnership's formation, the
Purchaser has the option to purchase, for a price equal to the appraised
fair market value thereof, any RC which the Partnership determines to sell.
Accordingly, consummation of any transaction to sell any of the Properties
would be subject to, among other limitations, the election of the Purchaser
not to exercise such option. Under the Option Agreement, the Partnership
has an option, subject to certain limitations and restrictions, to purchase
up to 15 additional RCs developed by the Purchaser or any wholly owned (or
in certain circumstances partly owned) affiliate of the Purchaser at the
lower of the appraised value of the RC or the sum of

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<PAGE>
115% of the costs incurred in connection with development of the RC and an
amount equal to net operating losses incurred between completion and the
purchase.

Other. Pursuant to the Partnership Agreement, the Partnership
reimburses the Purchaser for general and administrative costs incurred on
behalf of the Partnership. The reimbursement has amounted to less than
$200,000 for each year since the Partnership's formation. In connection
with the bankruptcy proceedings of the Purchaser and certain of its
affiliates (not including the Partnership or the General Partner) (see
"Certain Information Concerning the Purchaser -- General"), the Purchaser
rejected a lease agreement between the Purchaser and Forum Retirement
Operations, L.P., which was then an affiliated operating partnership of the
Partnership ("Operations") (see "Certain Information Concerning the
Partnership -- General"), pursuant to which the Purchaser leased one of the
Properties. The rejection was authorized by the bankruptcy court on
June 10, 1991, and on August 15, 1992, Operations filed an application for
allowance and payment of an administrative claim, which was denied by the
bankruptcy court on February 5, 1992. On February 14, 1992, Operations
appealed. On February 5, 1993, a settlement agreement (the "Settlement
Agreement") was entered into by and among the Partnership, Operations, the
General Partner, and the Purchaser, providing for the payment to the
Partnership by the Purchaser of $125,000 and the allowance by the Purchaser
of a general unsecured claim in favor of the Partnership in the amount of
$1,237,609, which was satisfied by the issuance of 63,612 shares of common
stock of the Purchaser to Operations. These shares of common stock were
sold pursuant to a tender offer effected in 1993 by three investment
entities which together controlled a majority of the Purchaser's capital
stock (the "FGI Investors") for cash in the amount of $3.62 per share. See
"Certain Information Concerning the Purchaser." The Settlement Agreement
also provided that, commencing with the last quarter of 1992, general and
administrative costs incurred by the Purchaser on behalf of the Partnership
would be reimbursed at a rate of $180,000 per annum.

The Partnership Agreement provides that the General Partner and its
officers, directors, agents, and employees will not be liable to the
Partnership or any Limited Partner for any error in judgment or breach of
fiduciary duty that does not constitute (i) a breach of that person's duty
of loyalty to the Partnership, as that duty of loyalty may be specified in
or modified by the Partnership Agreement, (ii) an act or omission not in
good faith or which involves intentional misconduct or a knowing violation
of law, or (iii) a transaction from which an improper personal benefit is
derived. The Partnership Agreement also provides that the Partnership will
indemnify the General Partner and its affiliates, directors, officers,
employees, and agents, to the full extent permitted by law, against
liabilities, costs, and expenses (including legal fees and expenses)
incurred by the indemnified persons in connection with litigation or
threatened litigation as a result of its status as the general partner of
the Partnership or an affiliate, officer, employee, or agent of the General
Partner where (x) the indemnified person acted in good faith and in a
manner it believed in good faith to be in, or not opposed to, the best
interests of the Partnership and, with respect to a criminal proceeding,
had no reasonable cause to believe its conduct was unlawful and (y) the
indemnified person's conduct did not constitute willful misconduct. The
Partnership is authorized to purchase insurance against liabilities
asserted against and expenses incurred by the foregoing persons in
connection with the Partnership's activities, whether or not the
Partnership would have the power to indemnify those persons against those
liabilities under the provisions described above. The Partnership has
purchased such insurance, the annual premium for which was $170,000 for the
current policy period. The Partnership Agreement provides that the
Partnership may enter into contracts with the foregoing persons or adopt
written procedures pursuant to which arrangements are made for the
advancement of expenses, the funding of the Partnership's indemnity
obligations, and other procedures regarding indemnification as are
appropriate. As a result of such provisions, the Limited Partners have
more limited rights against the General Partner and its affiliates than
they would have absent the limitations in the Partnership Agreement.

The General Partner has entered into indemnification agreements with
each of its directors. These indemnification agreements provide for, among
other things, (i) the indemnification by the General Partner of the
indemnified persons thereunder to the extent permitted by Delaware law,
(ii) the advancement of attorneys' fees and other expenses, and (iii) the
establishment, upon approval by the FRI Board, of trust or other funding
mechanisms to fund the General Partner's indemnification obligations
thereunder. The Purchaser has also entered into indemnification agreements
with each of the directors of the General Partner. These indemnification
agreements

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provide for, among other things, (i) the indemnification by the Purchaser
of the indemnified persons thereunder to the extent permitted by Indiana
law, (ii) the advancement of attorneys' fees and other expenses, and
(iii) the establishment, upon approval by the Board of Directors of the
Purchaser, of trusts or other funding mechanisms to fund the Purchaser's
indemnification obligations thereunder.

Certain Litigation against the Purchaser and the General Partner

On January 24, 1994, the Russell F. Knapp Revokable Trust
("Plaintiff") filed a complaint (as amended, the "Iowa Complaint") in the
United States District Court for the Northern District of Iowa (the "Iowa
District Court") against the General Partner alleging breach of the
Partnership Agreement, breach of fiduciary duty, fraud, and civil
conspiracy. On March 17, 1994, Plaintiff amended the Iowa Complaint to add
the Purchaser as a defendant. The Iowa Complaint alleged, among other
things, that (i) Plaintiff held a substantial number of Units, (ii) the FRI
Board was not comprised of a majority of Independent Directors as required
by the Partnership Agreement and as allegedly represented in the
Partnership's 1986 Prospectus for its initial public offering of the Units,
(iii) the allegedly improper composition of the FRI Board was a consequence
of actions by the Purchaser, (iv) the FRI Board had approved and/or
acquiesced in 8% management fees being charged by the Purchaser under the
Management Agreement, whereas the Iowa Complaint alleged that the "industry
standard" for such fees was 4%, thereby resulting in an "overcharge" to the
Partnership estimated by Plaintiff at $1.8 million per annum, beginning in
1994, and (v) as a consequence of the allegedly improper composition of the
FRI Board, the Purchaser and the General Partner breached the Partnership
Agreement and securities laws and failed to discharge fiduciary duties. On
April 4, 1995, the Iowa District Court entered an order dismissing the Iowa
Complaint for procedural reasons.

On June 15, 1995, the Plaintiff filed a complaint (the "Indiana
Complaint") in the United States District Court for the Southern District
of Indiana against the Purchaser and the General Partner. The allegations
set forth in the Indiana Complaint are essentially the same as those
included in the Iowa Complaint, except that the Indiana Complaint omits the
allegations of fraud (in which Plaintiff claimed, in general, that the
Purchaser and the General Partner knowingly made false representations that
they would comply with the terms of the Partnership's 1986 Prospectus and
the Partnership Agreement with respect to the selection of Independent
Directors and with respect to the number of directors on the FRI Board)
included in the Iowa Complaint and contains allegations of insider trading
and oppression of minority Unitholders (in which Plaintiff claims, in
general, that the Purchaser and the General Partner have utilized their
position of control and their access to inside information to purchase
Units at less than fair market value and engaged in a course of conduct to
force minority Unitholders to sell their Units at less than fair market
value) that were not included in the Iowa Complaint.

Plaintiff is seeking the restoration of certain former directors to
the FRI Board and the removal of certain other directors from the FRI
Board, an injunction prohibiting the payment of 8% management fees, and
unspecified compensatory and punitive damages.

Each of the Purchaser and the General Partner has previously stated
that it believes there are substantial defenses to the claims asserted by
Plaintiff and that it intends vigorously to defend against such claims. In
accordance with the Partnership Agreement, the Partnership reimbursed the
General Partner for $68,000 and $146,000 of litigation costs relating to
these claims in the six months ended June 30, 1995 and calendar year 1994,
respectively.

Upon the acceptance for payment by the Purchaser of Units tendered
pursuant to the Offer, each tendering Unitholder will be deemed to have
released the Purchaser, the General Partner, and their stockholders,
respective affiliates, directors, officers, employees, agents, and
representatives from any and all claims, causes of action, and liabilities,
known or unknown, arising from or relating to the business and affairs of,
or any transactions by or involving, or the purchase and ownership of
securities of, the Partnership, from the beginning of time through the date
on which tendered Units are accepted for payment in accordance with the
terms of the Offer, including without limitation any claim, cause of
action, or liability arising from or relating to the subject matter of the
litigation described above. Accordingly, tendering Unitholders may be
waiving significant rights, including the right to participate in any
judgment for monetary damages or in any monetary or other settlement. Such
release is set forth

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in the accompanying Letter of Transmittal, which Unitholders are urged to
read carefully. See "The Offer -- Release of Claims."

Certain Federal Income Tax Consequences

Introduction. The following summary is a general discussion of
certain federal income tax consequences to Unitholders as a result of the
sale of Units to the Purchaser pursuant to the Offer and does not purport
to cover in detail all federal income tax consequences that may arise. As
a result, each Unitholder should consult his, her, or its own tax advisor.
The summary is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), treasury regulations thereunder, rulings, and other
pronouncements, and decisions now in effect, all of which are subject to
change.

The following discussion is limited to the material federal income tax
aspects of the Offer for a holder of Units who is a citizen or resident of
the United States and who holds the Units as a "capital asset" (generally,
property held for investment) within the meaning of Section 1221 of the
Code. The summary does not discuss all aspects of federal income taxation
that may be relevant to a person disposing of Units in the Offer in light
of such person's personal investment circumstances or to certain types of
persons subject to special treatment under the federal income tax laws (for
example, trusts, life insurance companies, tax-exempt organizations,
financial institutions, or S corporations) and does not discuss any aspects
of state, local, or foreign tax laws.

Amount of Gain or Loss. Upon the sale of Units pursuant to the Offer,
gain or loss will be based on the difference between the amount realized
and the tax basis for such Units at the time of the sale. In addition, a
selling Unitholder will be allocated taxable income and losses of the
Partnership deemed to accrue in the relevant period up to the sale of
Units. The amount realized on a sale of Units equals the amount of cash
received in the Offer attributable to the Units plus the Unitholder's share
of the Partnership's liabilities. If the Unitholder's tax basis is less
than the Unitholder's share of the Partnership's liabilities (e.g., as a
result of the effect of net loss allocations and distributions exceeding
the cost of such Unitholder's Units), the Unitholder's gain would exceed
the cash proceeds realized upon the sale of Units. It is possible that
some of the consideration may be deemed to be attributable to the release
of the Purchaser relating to the litigation described herein. In such a
case, any such consideration would be separately taxable and would
constitute a reduction in the amount received for the Unit. The Purchaser
does not believe any such consideration is material.

Characterization of Gain or Loss. Generally, gain or loss recognized
by a Unitholder on the sale of a Unit held for more than 12 months will be
taxable as long-term capital gain or loss. However, a Unitholder will
recognize ordinary income or loss in an amount equal to the difference
between (i) the portion of the amount realized by the Unitholder that is
attributable to such Unitholder's share of the Partnership's "unrealized
receivables" and "substantially appreciated inventory items" (including
depreciation recapture) as such terms are defined in Section 751 of the
Code ("Section 751 Property"), including the Partnership's share of
Section 751 Property of FRP Financing Limited, L.P., the Partnership's
affiliated operating partnership (the "Subsidiary Partnership"), and (ii)
the portion of the Unitholder's tax basis in such Unitholder's Units that
is attributable to such Section 751 Property of the Subsidiary Partnership.
The Partnership believes that the Section 751 Property of the Partnership
consists of depreciation recapture (although there can be no assurance that
other assets of the Subsidiary Partnership will not be considered Section
751 Property). Existing treasury regulations require each person who
transfers an interest in a partnership possessing Section 751 Property to
file a statement with such person's tax return reporting the transfer and
certain other information relating thereto.

Tax Basis in Units. The Internal Revenue Service (the "IRS") has
ruled that a partner has one basis for the partner's entire interest in a
partnership even if a partner bought partnership interests in different
transactions. Upon a sale of a portion of such aggregate interest (e.g.,
in a partial tender of Units), a Unitholder would be required to allocate
such Unitholder's aggregate tax basis between the Units sold and the Units
retained by some equitable apportionment method, such as the relative fair
market value of such Units on the date of sale. It is not entirely clear
(i) whether the IRS' ruling would apply in the case of a publicly traded
limited partnership, such as the Partnership,

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the interests in which are evidenced by separate registered depositary
receipts providing a verifiable means of identifying each separate interest
and tracing the purchase price of such interest and (ii) whether the
aggregation rule results in the tacking of the holding period of earlier
purchased Units to more recently acquired Units.

Taxation of Capital Gains/Capital Losses and Ordinary Income. Except
for any loss associated with Section 751 Property, the loss arising from
the sale of Units will be a capital loss. Capital losses generally are
deductible only to the extent of capital gains plus, in the case of
noncorporate Unitholders, up to $3,000 of ordinary income. These capital
losses may be utilized to offset capital gains from other sources and may
be carried forward indefinitely. Corporations may only offset capital
losses against capital gains. In general, corporations may carry back
capital losses for three years and carry forward such losses for five
years.

The maximum federal income tax rate applicable to capital gains and
ordinary income for corporations is 35%. The maximum ordinary federal
income tax rate for individuals, estates, and trusts is 39.6% (for married
individuals filing joint returns and certain unmarried individuals with
taxable income in excess of $250,000 ($125,000 for married individuals
filing separately)), whereas the maximum long-term capital gains rate for
such taxpayers remains at 28%.

Effect of Passive Loss Rules. Upon the sale by a Unitholder of all of
the Unitholder's Units pursuant to the Offer, any net losses of the
Partnership that were suspended under the passive loss rules of the Code
may be used to offset income and gain on such sale. If a Unitholder's
suspended losses exceed the gain on the sale of Units, such loss may be
applied against any income or gain of the Partnership for the current year
and thereafter may be applied against any other passive activity income of
such Unitholder in the current year. Thereafter, any excess suspended
losses from prior years will be available to offset income and gain from
any other sources. In a partial tender, suspended losses remain suspended
to the extent such losses exceed the gain recognized on the partial tender
and any allocable income from the Partnership for the year of tender.

Tax Status of the Partnership. The Omnibus Budget Reconciliation Act
of 1987 provides that certain publicly traded partnerships will be treated
as corporations for federal income tax purposes. A grandfather provision
delays corporate tax status until 1998 for those publicly traded
partnerships in existence prior to December 18, 1987, such as the
Partnership. Therefore, on January 1, 1998, the Partnership, if still
classified as a publicly traded partnership at that time, will be treated
as transferring all of its assets, including its interest in the Subsidiary
Partnership (subject to liabilities), to a new corporation in exchange for
the stock thereof and distributing the stock to the partners in liquidation
of their interests in the Partnership. This deemed exchange and
liquidation may result in gain being realized by the Partnership to the
extent the liabilities of the Partnership (including its share of the
liabilities of the Subsidiary Partnership) exceed the adjusted basis of the
Partnership's properties deemed contributed to the newly formed
corporation. Any such gain would be allocated to the partners under the
Partnership Agreement. Moreover, the deemed contribution of the assets of
the Partnership to the newly formed corporation will result in a deemed
cash distribution to each partner of its share of the liabilities of the
Partnership. Such deemed distribution will reduce a partner's basis in
such partner's Units dollar for dollar (but not below zero). To the extent
the amount of cash deemed distributed exceeds the tax basis of a partner's
Units, gain will result. The tax basis that a partner will have in the
stock deemed distributed to such partner will equal the tax basis such
partner had in its Units, as adjusted by the transactions described above.

In general, the newly formed corporation would be required to pay
federal income tax at corporate rates on its net income, thereby reducing
the amount of any cash available to be distributed by the corporation; all
items of income, gain, loss, deduction, and credit of the corporation would
be reflected only on its tax returns and would not be passed through to the
partners in the Partnership; all or part of any distributions made either
directly to the limited partners and the General Partner would be treated
as dividends to the extent of the current and accumulated earnings and
profits of the corporation; and distributions in excess thereof would be
treated as a return of capital to the extent of the recipient's basis in
its stock, while the remainder would be treated as capital gain (assuming
the limited partner's stock constituted a capital asset). In addition, if
the Purchaser owned, directly or indirectly, 80% or more of the stock of
the newly formed corporation, the corporation may become part of a
consolidated group of

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corporations of which the Purchaser is a member, which could result in
certain consequences, such as, among other things, the newly formed
corporation being subjected to several liability for federal income tax
liabilities of the consolidated group. Each Unitholder should consult his,
her, or its own tax advisor regarding the federal income tax consequences
to such Unitholder of the conversion of the Partnership to a corporation in
1998.

It is possible that, after completion of the Offer, if certain
conditions are satisfied (including whether the Units are considered
"readily tradeable" on a secondary market or the substantial equivalent
thereof), the Partnership will no longer qualify as a publicly traded
partnership and will not be subject to being treated as a corporation
commencing on January 1, 1998. The Treasury Department has recently issued
proposed regulations defining publicly traded partnerships. Each
Unitholder is advised to consult his, her, or its own tax advisor with
respect to the effect of various potential conditions on the status of the
Partnership as a publicly traded partnership.

Information Return Filing Requirements Relating to Withholding. No
reporting requirements apply with respect to a sale of Units by an
individual who is a United States citizen and who effects such sale through
a broker, dealer, commercial bank trust company, or other nominee.
However, a Unitholder who sells Units pursuant to the Offer other than
through a broker, dealer, commercial bank, trust company, or other nominee
or who is not a United States citizen is required to notify the Partnership
in writing of such sale. In turn, the Partnership is required to notify
the IRS of such sale and to furnish the transferor with certain
information.

Backup Federal Income Tax Withholding. A Unitholder (other than
certain exempt Unitholders including, among others, all corporations and
certain foreign individuals) who tenders Units may be subject to 31% backup
withholding unless the Unitholder provides a taxpayer identification number
("TIN") and certifies that the TIN is correct or properly certifies that
such Unitholder is awaiting a TIN. A Unitholder who does not furnish a TIN
may be subject to a penalty imposed by the IRS. A Unitholder may avoid
backup withholding by properly completing and signing the Form W-9 included
as part of the Letter of Transmittal. If backup withholding applies to a
Unitholder, the Depositary is required to withhold 31% from payments to
such Unitholder. Backup withholding is not an additional tax. Rather, the
amount of the backup withholding can be credited against the federal income
tax liability of the person subject to the backup withholding. If backup
withholding results in an overpayment of tax, a refund can be obtained by
the Unitholder upon filing an income tax return.

Transferor/Transferee Allocations. The Partnership's taxable income
and losses for the taxable year will be allocated between the Purchaser and
a tendering Unitholder in accordance with the terms of the Partnership
Agreement. The Partnership Agreement requires that the Partnership's
taxable income and losses be determined on an annual basis, apportioned
equally among the constituted months, and allocated among the partners of
record in accordance with their respective percentage interests as of the
close of business on the last day of the month preceding each constituent
month. Accordingly, in the case of a transfer of a Unit, the transferor
will be allocated taxable income and loss deemed to accrue during the month
of transfer and the Purchaser will be allocated taxable income and losses
deemed to accrue following the month of the transfer and thereafter. It is
not entirely clear that the Partnership's convention of allocating the
Partnership's taxable income and taxable loss would be sustained if
challenged by the IRS; the General Partner is authorized to revise the
Partnership's method of allocation between transferors and transferees to
comply with the requirements of the Code.

FIRPTA Withholding. Pursuant to Section 897 of the Code, gain or loss
realized by a foreign person on the disposition of an interest in a
partnership, such as the Partnership, may be subject to federal income tax
to the extent the amount realized on such sale is attributable to United
States real property interests. Under Section 1445 of the Code, the
transferee of a partnership interest held by a foreign person may be
required to deduct and withhold a tax equal to 10% of the amount realized
on the disposition. The Depositary, however, will not be required to
withhold 10% of the amount realized by any tendering Unitholder if the
Unitholder furnishes an affidavit stating, under penalty of perjury, the
Unitholder's TIN, that such Unitholder is not a foreign person, and the
Unitholder's address.

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Possible Legislative Tax Changes. There have been a number of
proposals made in Congress and by the Treasury Department and other
government agencies for changes in the federal income tax laws including
changes in tax rates. In addition, the IRS has proposed and may still be
considering changes in regulations and procedures, and numerous private
interest groups have lobbied for regulatory and legislative changes in
federal income taxation. It is likely that further proposals will be
forthcoming or that previous proposals will be revived in some form in the
future. It is impossible to predict with any degree of certainty what past
proposals may be revived or what new proposals may be forthcoming, the
likelihood of adoption of any such proposals, the likely effect of any such
proposals upon investment in the Partnership, or the effective date of any
legislation which may derive from any such past or future proposals.
Unitholders are strongly urged to consider ongoing developments in this
uncertain area.

State and Local Taxes. In addition to the federal income tax
consequences described above, Unitholders should consider potential state
and local tax consequences of tendering their Units. The rules of some
states and localities for computing and/or reporting taxable income, gain,
or loss, may differ from the federal rules. Each Unitholder is advised to
consult his, her, or its own tax advisor with respect to state and local
issues affecting the Units.

Unitholders are advised to consult their own tax advisors regarding
the specific tax consequences to them resulting from the Offer, including
the consequences under federal, state, local, and foreign tax laws.

BACKGROUND OF THE OFFER

In June 1993, the Purchaser was recapitalized in a series of
transactions pursuant to which the FGI Investors obtained beneficial
ownership of a majority of the Purchaser's capital stock and the Board of
Directors of the Purchaser was reconstituted to consist of a majority of
persons designated by the FGI Investors and certain other persons
acceptable to the FGI Investors. See "Certain Information Concerning the
Purchaser." Following the recapitalization of the Purchaser, the
Purchaser's new management began evaluating alternatives relating to the
Purchaser's investment in the Partnership. The Purchaser then beneficially
owned 1,960,268 Units, or 22.1% of the total number of Units then
outstanding. At that time, approximately $22.5 million of the
Partnership's bank debt (the "Bank Debt") was scheduled to mature on
December 31, 1993. The maturity date of the Bank Debt had been extended
during March 1993 from March 31, 1993 to December 31, 1993 and, in
connection with the extension, the Partnership had made a principal payment
of $2,475,000 and paid a restructuring fee of $225,000.

On August 12, 1993, the Purchaser acquired the right to purchase the
Bank Debt and, in connection therewith, the Partnership secured certain
amendments to the Bank Debt which the Purchaser believed were advantageous
to the Partnership, including the right of the Partnership to extend the
maturity date of the Bank Debt from December 31, 1993 to March 31, 1994
upon the payment of a fee of $300,000. Thereafter, the Purchaser continued
to consider alternative courses of action that it might take with respect
to its ownership of Units, either in conjunction with or separately from
the repayment or refinancing of the Bank Debt by the Partnership. Courses
of action considered by the Purchaser with respect to its ownership of
Units included, among others, (i) the proposal of a recapitalization of the
Partnership, (ii) the acquisition by the Purchaser of additional Units in
open-market purchases, negotiated transactions, in a tender or exchange
offer, or otherwise, (iii) the proposal of a refinancing or modification by
the Partnership of some or all of its long-term debt, including the Bank
Debt due December 31, 1993, (iv) the acquisition of some or all of the
Partnership's long-term debt by the Purchaser, (v) the proposal of a
disposition by the Partnership of some or all of its assets, (vi) the
proposal of a merger or other business combination transaction involving
the Partnership, or (vii) a combination of one or more of the foregoing.

In September 1993, the Purchaser proposed a recapitalization (the
"Recapitalization") of the Partnership pursuant to which the Purchaser
would provide to the Partnership additional equity capital to be used to
prepay a portion of the Bank Debt due December 31, 1993 and the Partnership
would obtain new mortgage debt financing, the proceeds of which would be
used to prepay the remaining principal balance of the Bank Debt due
December 31, 1993 and certain secured notes issued by the Partnership (the
"Split Coupon Notes"), which were scheduled to mature

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on June 30, 1996. The Purchaser's primary purpose in proposing the
Recapitalization was to enable the Partnership to repay the Bank Debt when
it became due on December 31, 1993 and otherwise to refinance and
restructure its indebtedness in a manner which would reduce the
Partnership's total debt service requirements.

A committee of the FRI Board comprised of directors who were not
affiliated with the Purchaser (the "Recapitalization Committee") was
established to consider the proposed Recapitalization. The
Recapitalization Committee retained independent legal counsel and an
independent financial advisor to assist it with its consideration of the
proposed Recapitalization and alternatives thereto. During September and
early October 1993, representatives of the Recapitalization Committee and
of the Purchaser had numerous telephone meetings to negotiate the specific
terms of the Recapitalization. Following these negotiations, the
Recapitalization Committee, in consultation with its independent legal
counsel and financial advisor, determined to approve the Recapitalization
and, on October 6, 1993, the Partnership and the Purchaser entered into a
Recapitalization Agreement (the "Recapitalization Agreement").
Simultaneously with the execution and delivery of the Recapitalization
Agreement, the Partnership entered into a commitment letter providing for
the new mortgage debt financing contemplated as part of the
Recapitalization. The General Partner has stated in publicly available
documents that it undertook the Recapitalization because, in general:
(i) absent the Recapitalization, the Partnership would have had
insufficient cash to repay its Bank Debt at December 31, 1993, and the
General Partner had been informed by the bank lender that the bank lender
was unwilling to extend the maturity thereof on terms acceptable to the
Partnership; (ii) it considered the opportunity to refinance the Split
Coupon Notes to be attractive; and (iii) the Recapitalization would result
in a reduction of the total debt service requirements of the Partnership.

Pursuant to the Recapitalization Agreement, on October 7, 1993, the
Partnership issued 6,500,000 Units to Forum A/H, Inc., a Delaware
corporation and a wholly owned subsidiary of the Purchaser ("Forum A/H"),
and Forum A/H made a capital contribution to the Partnership of $13.0
million in the aggregate, or $2.00 per Unit, thereby providing the
Partnership with the additional equity required by the lender as a
condition to providing the Partnership with new debt financing. The $2.00
per Unit purchase price paid for the Units purchased by Forum A/H pursuant
to the Recapitalization Agreement was determined by the Recapitalization
Committee in accordance with the minimum price requirements contained in
the Partnership Agreement, after consultation with its independent
financial advisor. The Purchaser believes that the acquisition of
additional Units at $2.00 per Unit represented an attractive investment by
the Purchaser (regardless of its other interests in respect of the
Partnership, including its rights under the Management Agreement).
Pursuant to the Recapitalization Agreement, the Partnership applied the
$13.0 million of proceeds from the sale of Units to Forum A/H to the
partial prepayment of the Bank Debt due December 31, 1993, thereby reducing
the balance thereof to approximately $9.5 million.

Further, to facilitate the Recapitalization, between December 23, 1993
and December 28, 1993, Forum A/H acquired approximately $30.7 million
aggregate principal amount of the Split Coupon Notes. Pursuant to a letter
agreement among the Purchaser, Forum A/H, and the Partnership, Forum A/H
waived its rights to receive certain yield maintenance premiums in respect
of the Split Coupon Notes purchased by Forum A/H, and the Partnership
agreed to pay to Forum A/H all sums required to be paid by Forum A/H in
connection with the financing of Forum A/H's acquisition of the Split
Coupon Notes. The Partnership further agreed to reimburse Forum A/H for
all other expenses incurred by it in connection with the purchase of the
Split Coupon Notes and related transactions, but the Purchaser received no
fees or other additional consideration in connection therewith.

As contemplated by the Recapitalization Agreement, on December 30,
1993, the Partnership obtained $50.7 million in new mortgage debt financing
(the "1993 Mortgage Loan"). The proceeds of the 1993 Mortgage Loan were
used to prepay the approximately $9.5 million remaining principal balance
of the Bank Debt due December 31, 1993 and approximately $34.1 million
aggregate principal amount of the Split Coupon Notes (including the $30.7
million aggregate principal amount of Split Coupon Notes then held by Forum
A/H) and to pay related fees and expenses.

As a result of the purchase of the 6,500,000 Units by Forum A/H
pursuant to the Recapitalization Agreement, the Purchaser increased its
aggregate beneficial ownership of Units to 8,440,268, or 55.2% of the total
number of Units outstanding. In accordance with the terms of the
Recapitalization Agreement, on January 10, 1994, the Partnership commenced
a subscription offering (the "Subscription Offering") giving Unitholders of
record as of

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October 18, 1993 (other than the Purchaser and its affiliates) the
opportunity to purchase additional Units at $2.00 per Unit, the same price
paid by Forum A/H under the Recapitalization Agreement, and thereby avoid
dilution as a result of the issuance of the 6,500,000 Units to Forum A/H.
Pursuant to the Subscription Offering, which expired on February 15, 1994,
eligible Unitholders purchased a total of 1,994,189 additional Units,
resulting in proceeds to the Partnership of $3,998,378. In accordance with
the terms of the Recapitalization Agreement, the proceeds of the
Subscription Offering were applied to repurchase 1,994,189 Units from Forum
A/H at a purchase price of $2.00 per Unit, the same price paid by Forum A/H
for such Units, without interest or other adjustment. As a result of the
repurchase of Units from Forum A/H, the Purchaser's aggregate beneficial
ownership of Units was reduced to 6,464,079, or 44.2% of the total number
of Units outstanding. See "Certain Information Concerning the Purchaser"
for a discussion of the number of Units presently beneficially owned by the
Purchaser. The Recapitalization Agreement provides that at any time and
from time to time the Partnership will, on the request of the Purchaser or
any of its affiliates, in accordance with the Partnership Agreement file
with the Commission as promptly as practicable after receiving the request,
and use all reasonable efforts to cause to become effective, a registration
statement under the Securities Act registering for offer and sale all or a
portion of the Units acquired pursuant to the Recapitalization Agreement or
owned as of October 6, 1993 by the Purchaser or its affiliates included in
the request.

Pursuant to the Recapitalization Agreement, the Partnership has agreed
that, subject to certain exceptions, it will indemnify and hold the
Purchaser and each of its respective affiliates (other than the
Partnership, the General Partner, and the directors of the General Partner)
harmless against any and all liabilities relating to any claim, action, or
proceeding made or brought by a third party in respect of the transactions
and matters referred to or contemplated by the Recapitalization Agreement.
Also, each of the Partnership and the Purchaser has agreed under the
Recapitalization Agreement that it will indemnify and hold the other,
together with its affiliates, harmless against liabilities relating to any
breach of any indemnifying party's representations, warranties, or
covenants made under the Recapitalization Agreement. The Recapitalization
Agreement also provides that the Partnership will bear all of the costs and
expenses incurred in connection with the transactions contemplated by the
Recapitalization Agreement, including the costs and expenses incurred by
the Purchaser.

Following the completion of the 1993 Recapitalization, the Purchaser
continued to evaluate its investment in the Partnership. Following certain
conversations between representatives of the Purchaser and members of the
FRI Board with respect thereto, on August 28, 1995, the Purchaser furnished
to the FRI Board a letter containing an analysis of the possible
acquisition of additional Units by the Purchaser. The analysis contained
in such letter included information regarding historical trading prices for
the Units and two hypothetical valuation cases showing valuations
substantially below the Per Unit Price being offered hereby. The text of
the letter and the attachments thereto are attached as Annex B hereto. See
"Special Factors -- Certain Determinations to the Purchaser."

On September 1, 1995, the Independent Directors of the FRI Board
furnished a letter to the Purchaser, the text of which was as follows:

"As the independent directors of the general partner of
Forum Retirement Partners, L.P. (the "Partnership"), we
have reviewed your memorandum of August 28, 1995, and
thought it appropriate to respond. We certainly
appreciate your willingness to apprise us of Forum
Group's thoughts regarding acquiring the Preferred
Depositary Units ("Units") in the Partnership not
currently owned by Forum Group. Your memorandum states
that you have not yet decided whether to pursue any
particular course of action but would like feedback
prior to such a decision. The board of directors of
the general partner has not undertaken any evaluation
of your hypothetical case or any alternatives that may
be available to the Partnership in the event that Forum
Group decides to pursue a transaction of the type set
forth in your hypothetical. As a result we cannot
provide any views on your hypothetical.

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Discussions with Forum Group of any proposal it decides
to make to the general partner of the Partnership,
however, should only occur with a special committee of
the independent directors of the general partner. This
special committee should be empowered to evaluate the
Partnership's prospects and alternatives and should be
furnished by Forum Group, as manager of the
Partnership's properties, all relevant information and
projections concerning the Partnership's properties and
operations. If Forum Group decides to pursue a
transaction, we stand prepared to serve as the special
committee to evaluate the Partnership's alternatives
with the assistance of independent legal and financial
advisors."

On September 23, 1995, the Purchaser delivered to the FRI Board a
letter, the text of which was as follows:

"We are pleased to advise you that Forum Group, Inc.
has decided to initiate a tender offer to acquire,
subject to certain conditions, preferred depositary
units representing limited partners' interests in Forum
Retirement Partners, L.P. at $2.50 per unit, net to the
seller in cash. The decision was made at a meeting of
the Executive Committee of FGI's Board of Directors
earlier this evening. We expect to make a public
announcement with respect thereto prior to the
commencement of trading on Monday, September 25th, and
will furnish your counsel the formal tender offer
documentation as soon as reasonably possible.

Assuming that the tender offer is publicly announced on
September 25, 1995, it would be required to be formally
commenced by not later than October 2, 1995. In the
event that the tender offer were commenced on that
date, the expiration date would be October 31, 1995 and
the Schedule 14D-9 would be required to be filed on
October 17, 1995.

We believe that the $2.50 per unit tender offer price
is fair to unitholders who desire liquidity. The $2.50
per unit price represents a 29% premium over the
closing sales price for units on the AMEX yesterday and
a 26% premium to the average closing sales price for
units on the AMEX over the 30 calendar days. Finally,
while the tender offer permits unitholders who desire
liquidity to sell their units at a substantial premium
to market prices, it will also permit unitholders who
wish to maintain all or a portion of their investment
in FRP to do so. Accordingly, we trust that you will
decide to support the tender offer.

We are, of course, available to discuss any aspect of
our tender offer with you at your convenience."

On September 25, 1995, the Purchaser delivered a letter to the
Partnership, requesting that the Partnership furnish to the Purchaser the
Partnership's Unitholder list, non-objecting beneficial owners list, and
security position listing for the purpose of disseminating the Offer to
Unitholders.

On September 25, 1995, the Partnership published a press release, the
text of which was as follows:

"Forum Retirement Partners, L.P. (AMEX:FRL) announced
today that it had received a letter from Forum Group,
Inc. stating that Forum Group had decided to initiate
an unsolicited tender offer to acquire, subject to
certain conditions expected to be specified in the
definitive tender offer materials, the preferred
depositary units representing limited partners'
interest ("Units") in the Partnership not currently
owned by Forum Group at $2.50 per Unit, next to the
seller in cash. According to Forum Group, it currently
owns approximately 62% of the outstanding Units.

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As a result of Forum Group's letter, the Board of
Directors of Forum Retirement, Inc., the general
partner of the Partnership and a wholly-owned
subsidiary of Forum Group, met today and has formed a
special committee (the "Special Committee") comprised
solely of Board members who are not affiliated with
Forum Group to evaluate the proposed tender offer and
the options available to the Partnership. The Special
Committee intents to engage independent financial
advisors and legal counsel to advise and assist it.

Once the Partnership has received copies of Forum
Group's tender offer documents the Special Committee
will be able to evaluate the terms of the tender offer,
and the Board of Directors of Forum Retirement, Inc.
will indicate to the Unitholders whether it will make a
recommendation to Unitholders concerning the tender
offer, and if so, that recommendation. Unitholders are
advised to refrain from taking any action in respect of
their Units until the Special Committee has completed
its evaluation.

The Partnership is a Washington, D.C. area based matter
limited partnership that owns nine rental retirement
communities in five states that are managed by Forum
Group pursuant to a management contract."

On September 27, 1995, the Partnership agreed to provide to the
Purchaser the Partnership's Unitholder list, non-objecting beneficial
owners list, and security position listings for the purpose of
disseminating the Offer to Unitholders.

THE OFFER

Terms of the Offer

Upon the terms and subject to the conditions of the Offer, the
Purchaser will accept for payment, and thereby purchase, all Units validly
tendered prior to the Expiration Date and not properly withdrawn in the
manner described in "-- Withdrawal Rights." The term "Expiration Date"
means 12:00 midnight, New York City time, on October 31, 1995, unless and
until the Purchaser, in its sole discretion, has extended the period of
time for which the Offer is open, in which event the term "Expiration Date"
will mean the latest time and date on which the Offer, as so extended by
the Purchaser, expires.

The Purchaser expressly reserves the right, at any time or from time
to time, and regardless of the circumstances, to (i) extend the period of
time during which the Offer is open and thereby delay acceptance for
payment of, and the payment for, any Units, by giving oral or written
notice of such extension to the Depositary and (ii) amend the Offer in any
respect by giving oral or written notice of such amendment to the
Depositary. The rights reserved by the Purchaser in this paragraph are in
addition to the Purchaser's right to terminate the Offer as described in
"-- Certain Conditions of the Offer." Any extension, amendment, or
termination will be followed as promptly as practicable by public
announcement thereof, such announcement, in the case of an extension, to be
issued no later than 9:00 a.m., New York City time, on the next business
day after the previously scheduled Expiration Date in accordance with the
public announcement requirements of Rule 14d-4(c) under the Exchange Act.
Without limiting the obligation of the Purchaser under such Rule or the
manner in which the Purchaser may choose to make any public announcement,
the Purchaser currently intends to make announcements by issuing a release
to the Dow Jones News Service. If the Purchaser extends the Offer, then,
without prejudice to the Purchaser's rights under the Offer, the Depositary
may retain tendered Units on behalf of the Purchaser, and such Units may
not be withdrawn, except to the extent tendering Unitholders are entitled
to withdrawal rights as described in "-- Withdrawal Rights."

If the Purchaser makes a material change in the terms of the Offer or
the information concerning the Offer or waives a material condition of the
Offer, the Purchaser will disseminate additional tender offer materials and
extend the Offer to the extent required by Rules 14d-4(c) and 14d-6(d)
under the Exchange Act. The minimum

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<PAGE>
period during which an offer must remain open following material changes in
the terms of the offer or information concerning the offer, other than a
change in price or a change in percentage of securities sought, will depend
upon the facts and circumstances, including the relative materiality of the
terms or information changed. In a public release, the Commission has
stated that, in its view, an offer must remain open for a minimum period of
time following a material change in the terms of the offer and that a
waiver of a material condition is a material change in the terms of the
offer. The release states that an offer shall remain open for a minimum of
five business days from the date a material change is first published,
sent, or given to security holders and that, if material changes are made
with respect to information not materially less significant than the offer
price and the number of shares being sought, a minimum of 10 business days
may be required to allow adequate dissemination and investor response. The
requirement to extend the Offer will not apply to the extent that the
number of business days remaining between the occurrence of the change and
the then-scheduled expiration time equals or exceeds the minimum extension
period that would be required because of such amendment. As used in this
Offer to Purchase, "business day" means any day, other than Saturday,
Sunday, or a federal holiday, and consists of the time period from 12:01
a.m. through 12:00 midnight, New York City time.

The Purchaser has requested and obtained from the Partnership the
Partnership's Unitholder list, a non-objecting beneficial owners list, and
security position listings for the purpose of disseminating the Offer to
Unitholders. The Offer to Purchase, the Letter of Transmittal, and other
relevant materials are being mailed by the Purchaser to record holders of
Units and are being furnished to brokers, commercial banks, trust
companies, and similar persons whose names, or the names of whose nominees,
appear on the Partnership's Unitholder lists or, if applicable, who are
listed as participants in a clearing agency's security position listing,
for subsequent transmittal to beneficial owners of Units.

Acceptance for Payment and Payment for Units

Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any such
extension or amendment), the Purchaser will accept for payment, and thereby
purchase, and will pay for all Units validly tendered prior to the
Expiration Date (and not properly withdrawn in the manner described in
"-- Withdrawal Rights") as soon as practicable after the later of (i) the
Expiration Date and (ii) the satisfaction or waiver of the conditions
described in "-- Certain Conditions of the Offer." In all cases, payment
for Units purchased pursuant to the Offer will be made only after timely
receipt by the Depositary of (a) Depositary Receipts representing such
Units, or timely confirmation (a "Book-Entry Confirmation") of the book-
entry transfer of such Units into the Depositary's account at The
Depository Trust Company, the Midwest Securities Trust Company, or the
Philadelphia Depository Trust Company (collectively, the "Book-Entry
Transfer Facilities") in accordance with the procedures described in
"-- Procedure for Tendering Units," (b) a properly completed and duly
executed Letter of Transmittal or facsimile thereof, with any required
signature guarantees, or an Agent's Message (as hereafter defined) in the
case of a book-entry transfer, and (c) all other documents required by the
Letter of Transmittal. The term "Agent's Message" means a message,
transmitted by a Book-Entry Transfer Facility to, and received by, the
Depositary and forming a part of a Book-Entry Confirmation, which states
that such Book-Entry Transfer Facility has received an express
acknowledgment from the participant in such Book-Entry Transfer Facility
tendering the Units which are the subject of such Book-Entry Confirmation,
that such participant has received and agrees to be bound by the terms of
the Letter of Transmittal, and that the Purchaser may enforce such
agreement against such participant.

For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment, and thereby purchased, tendered Units if, as, and
when the Purchaser gives oral or written notice to the Depositary of its
acceptance of such Units for payment. Payment for Units accepted for
payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for the tendering
Unitholders for purposes of receiving payment from the Purchaser and
transmitting payments to the tendering Unitholders. Under no circumstances
will interest on the purchase price for Units be paid.

If any tendered Units are not accepted for payment pursuant to the
terms and conditions of the Offer for any reason, or if Depositary Receipts
representing more Units than are tendered are submitted to the Depositary,

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Depositary Receipts for such unpurchased or untendered Units will be
returned, without expense to the tendering Unitholder (or, in the case of
Units tendered by the book-entry transfer of such Units into the
Depositary's account at a Book-Entry Transfer Facility in accordance with
the procedures set forth in "-- Procedure for Tendering Units," such Units
will be credited to an account maintained within such Book-Entry Transfer
Facility), as promptly as practicable following the expiration,
termination, or withdrawal of the Offer.

If, prior to the Expiration Date, the Purchaser increases the
consideration offered to Unitholders pursuant to the Offer, such increased
consideration will be paid to all Unitholders whose Units are purchased
pursuant to the Offer whether or not such Units have been tendered prior to
such increase in consideration.

The Purchaser reserves the right, in its sole discretion, to transfer
or assign to any person, in whole or from time to time in part, Units now
or hereafter beneficially owned by it. Any transfer or assignment
contemplated in this paragraph will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of
tendering Unitholders to receive payment for Units validly tendered and
accepted for payment pursuant to the Offer.

Procedure for Tendering Units

For Units to be validly tendered pursuant to the Offer, a properly
completed and duly executed Letter of Transmittal or facsimile thereof,
with any required signature guarantees, or an Agent's Message in the case
of a book-entry transfer, and all other documents required by the Letter of
Transmittal, must be received by the Depositary at its address set forth on
the back cover of this Offer to Purchase on or prior to the Expiration
Date. In addition, either (i) Depositary Receipts representing Units must
be received by the Depositary, together with the Letter of Transmittal, at
such address, or such Units must be tendered pursuant to the procedures for
book-entry tender described below and a Book-Entry Confirmation received by
the Depositary, in each case prior to the Expiration Date, or (ii) the
guaranteed delivery procedure described below must be complied with.
Delivery of documents to an account established by the Depositary at a
Book-Entry Transfer Facility does not constitute delivery to the
Depositary.

The Depositary will establish accounts with respect to the Units at
the Book-Entry Transfer Facilities for purposes of the Offer within two
business days after the date of this Offer to Purchase. Any financial
institution that is a participant in a Book-Entry Transfer Facility's
system may make book-entry delivery of Units by causing such Book-Entry
Transfer Facility to transfer such Units into the Depositary's account in
accordance with such Book-Entry Transfer Facility's procedure for such
transfer. Although delivery of Units may be effected through book-entry at
a Book-Entry Transfer Facility, a properly completed and duly executed
Letter of Transmittal or facsimile thereof, with any required signature
guarantees, or an Agent's Message in the case of a book-entry transfer, and
all other documents required by the Letter of Transmittal, must, in any
case, be transmitted to and received by the Depositary at its address set
forth on the back cover of this Offer to Purchase prior to the Expiration
Date, or the guaranteed delivery procedure described below must be complied
with.

If Units are tendered otherwise than (i) by a registered holder of
such Units or (ii) for the account of a financial institution that is a
participant in the Securities Transfer Agents Medallion Program, the Stock
Exchange Medallion Program, or the New York Stock Exchange, Inc. Medallion
Signature Program (each an "Eligible Institution"), all signatures on the
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 1 of the Letter of Transmittal. If the Depositary Receipts
representing Units are registered in the name of a person other than the
signer of a Letter of Transmittal, the Depositary Receipts representing
Units must be endorsed or accompanied by appropriate unit powers, in either
case signed exactly as the name or names of the registered holder or
holders appear on the Depositary Receipts, with the signatures on the
Depositary Receipts or unit powers guaranteed as provided in the Letter of
Transmittal. See Instruction 1 of the Letter of Transmittal.

The method of delivery of all required documents is at the election
and risk of each Unitholder. If delivery is by mail, the use of registered
mail with return receipt requested, properly insured, is recommended.

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If a Unitholder desires to tender Units pursuant to the Offer and such
Unitholder's Depositary Receipts representing Units are not immediately
available or such Unitholder cannot deliver such Unitholder's Depositary
Receipts and all other required documents to the Depositary on or prior to
the Expiration Date, or if the procedure for book-entry transfer cannot be
completed on a timely basis, such Units may nevertheless be tendered if all
of the following guaranteed delivery procedures are complied with:

(i) such tenders are made by or through an Eligible
Institution;

(ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by the
Purchaser herewith, is received by the Depositary as provided
below prior to the Expiration Date; and

(iii) the Depositary Receipts for all physically delivered
Units in proper form for transfer or a Book-Entry Confirmation,
together with a properly completed and duly executed Letter of
Transmittal or facsimile thereof, with any required signature
guarantees, or an Agent's Message in the case of a book-entry
transfer, and all other documents required by the Letter of
Transmittal, are received by the Depositary within five business
days after the date of such Notice of Guaranteed Delivery.

The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission, or mail to the Depositary and must
include a signature guarantee by an Eligible Institution in the form set
forth in such Notice of Guaranteed Delivery.

In all cases, payment for Units tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the
Depositary of Depositary Receipts representing such Units or of a Book-
Entry Confirmation relating to such Units and a properly completed and duly
executed Letter of Transmittal or facsimile thereof, with any required
signature guarantees, or an Agent's Message in the case of a book-entry
transfer, and all other documents required by the Letter of Transmittal.

Under the federal income tax backup withholding rules, unless an
exception applies under the applicable laws and regulations, the Depositary
will be required to withhold, and will withhold, 31% of the gross proceeds
otherwise payable to a Unitholder or other payee pursuant to the Offer,
unless the Unitholder or other payee provides such Unitholder's TIN (social
security number or employer identification number) and certifies that such
number is correct and that such Unitholder is not subject to backup
withholding. Therefore, unless such an exception applies and is proved in
a manner satisfactory to the Purchaser and the Depositary, each tendering
Unitholder and, if applicable, each other payee, should complete and sign
the Substitute Form W-9 included as part of the Letter of Transmittal, in
order to provide the information and certification necessary to avoid
backup withholding. To avoid potential withholding of tax in an amount
equal to 10% of the purchase price of Units purchased pursuant to the
Offer, including the amount of any liabilities of the Partnership allocable
to such Units, each Unitholder must provide the Depositary with an
affidavit stating, under penalty of perjury, such Unitholder's TIN, that
the Unitholder is not a foreign person, and such Unitholder's address. See
the information under the caption "Federal Income Tax Consequences" in the
Letter of Transmittal. See also "Special Factors -- Certain Federal Income
Tax Consequences."

By executing a Letter of Transmittal as set forth above, a tendering
Unitholder irrevocably appoints designees of the Purchaser as such
Unitholder's attorneys-in-fact and proxies, each with full power of
substitution and resubstitution, in the manner set forth in the Letter of
Transmittal, to the full extent of such Unitholder's rights with respect to
the Units tendered by such Unitholder and accepted for payment by the
Purchaser and with respect to any and all other Units or other securities
issued or issuable in respect of such Units on or after the date of this
Offer to Purchase. All such proxies will be considered coupled with an
interest in the tendered Units. Such appointment will be effective when,
and only to the extent that, the Purchaser accepts such Units for payment
pursuant to the Offer. Upon such appointment, all prior proxies given by
such Unitholder (with respect to such Units and such other Units and
securities) will be revoked, without further action, and no subsequent
proxies may be given

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by such Unitholder (and, if given, will not be deemed effective). The
designees of the Purchaser will be empowered, among other things, to
exercise all voting and other rights of such Unitholder as they in their
sole discretion may deem proper at any meeting of the Unitholders or
otherwise. In order for Units to be validly tendered, upon the acceptance
for payment of such Units the Purchaser must be able to exercise full
voting rights with respect to such Units (or other securities or rights),
including voting at any meeting of Unitholders, whether or not scheduled,
and consenting to any action to be taken by Unitholders in the absence of a
meeting.

In order for any tender of Units to be valid, it must be in proper
form. All questions as to the form of documents and the validity,
eligibility (including time of receipt), and acceptance for payment of any
tender of Units will be determined by the Purchaser, in its sole
discretion, which determination will be final and binding on all parties.
The Purchaser reserves the right to waive any defect or irregularity in the
tender of any Units. No tender of Units will be deemed to have been
validly made until all defects and irregularities have been cured or
waived. None of the Purchaser, the Depositary, the Information Agent, or
any other person will be under any duty to give notification of any defects
or irregularities in tenders or incur any liability for failure to give any
such notification. The Purchaser's interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and
instructions thereto) will be final and binding.

The tender of Units pursuant to one of the procedures described above
will constitute a binding agreement between the tendering Unitholder and
the Purchaser on the terms and subject to the conditions of the Offer,
including the tendering Unitholder's representation and warranty that (i)
such Unitholder has full power and authority to tender, sell, assign, and
transfer such Units and (ii) when the same are accepted for payment by the
Purchaser, the Purchaser will acquire good, marketable, and unencumbered
title thereto, free and clear of all liens, restrictions, charges, and
encumbrances and will not be subject to any adverse claim.

Release of Claims

The Purchaser and General Partner are parties to certain litigation
involving, among other things, the propriety under the Partnership
Agreement of the composition of the FRI Board. See "Special Factors --
Certain Litigation against the Purchaser and the General Partner." Upon
acceptance for payment by the Purchaser of Units tendered pursuant to the
Offer, each tendering Unitholder will be deemed to have released the
Purchaser, the General Partner, and their respective stockholders,
affiliates, directors, officers, employees, agents, and representatives
from any and all claims, causes of action, and liabilities, known or
unknown, arising from or relating to the business and affairs of, or any
transactions by or involving, or the purchase and ownership of securities
of, the Partnership, from the beginning of time through the date on which
the tendered Units are accepted for payment in accordance with the terms of
the Offer, including without limitation any claim, cause of action, or
liability arising from or relating to the subject matter of the above-
referenced litigation. Accordingly, by tendering their Units, Unitholders
may be waiving significant rights, including their right to participate in
any judgment for monetary damages or in any monetary or other settlement.
Such release is set forth in the accompanying Letter of Transmittal, which
Unitholders are urged to read carefully.

Withdrawal Rights

Except as otherwise stated below, tenders of Units made pursuant to
the Offer are irrevocable. Units tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Purchaser pursuant to the Offer, may also be
withdrawn at any time after December 1, 1995.

For a withdrawal to be effective, a written, telegraphic, or facsimile
notice of withdrawal must be timely received by the Depositary at its
address set forth on the back cover of this Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the
Units to be withdrawn, the number of Units to be withdrawn, and the names
in which the Depositary Receipts representing the Units to be withdrawn are
registered, if different from that of the person who tendered such Units.
If Depositary Receipts representing Units have been delivered or otherwise
identified to the Depositary, then, prior to the release of such Depositary
Receipts, the

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tendering Unitholder must also submit the serial numbers shown on the
particular Depositary Receipts representing the Units to be withdrawn and,
unless such Units have been tendered for the account of an Eligible
Institution, the signature(s) on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Units have been tendered
pursuant to the procedures for book-entry transfer set forth in
"-- Procedure for Tendering Units," any notice of withdrawal must also
specify the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with the withdrawn Units.

All questions as to the form and validity (including time of receipt)
of any notice of withdrawal will be determined by the Purchaser, in its
sole discretion, which determination will be final and binding on all
parties. None of the Purchaser, the Depositary, the Information Agent, or
any other person will be under any duty to give notification of any defects
or irregularities in any notice of withdrawal or incur any liability for
failure to give such notification.

Withdrawals may not be rescinded, and any Units properly withdrawn
will thereafter be deemed not validly tendered for purposes of the Offer,
but may be retendered at any subsequent time prior to the Expiration Date
by again following one of the procedures described in "-- Procedure for
Tendering Units."

Sources and Amount of Funds

The Purchaser estimates that the maximum amount of funds required to
purchase Units pursuant to the Offer and to pay related costs and expenses
will be approximately $14.9 million. See "-- Fees and Expenses." The
Purchaser presently anticipates that all amounts required for the purchase
of Units and to pay related costs and expenses will be funded from the
Purchaser's existing cash balances.

Certain Conditions of the Offer

Notwithstanding any other provision of the Offer, the Purchaser will
not be required to accept for payment, purchase, or pay for any Units
tendered, and may postpone the acceptance for payment, the purchase of,
and/or the payment for, Units and/or may amend or terminate the Offer if at
any time at or before payment for any Units tendered pursuant to the Offer
(whether or not any Units have theretofore been accepted for payment or
paid for pursuant to the Offer) any of the following events shall occur:

(a) there shall be any action taken, or any statute,
rule, regulation, order, or injunction shall be sought, proposed,
enacted, promulgated, entered, enforced, or deemed applicable to
the Offer or any subsequent merger, consolidation, or other
business combination or other transaction involving the Purchaser
and the Partnership or the Subsidiary Partnership, or any other
action shall have been taken, proposed, or threatened, by any
domestic or foreign court, legislative body, or governmental
agency, or other regulatory or administrative agency or
commission, or any other person or entity, which (i) challenges
or seeks to challenge the Offer, makes or seeks to make illegal,
delays or seeks to delay, or otherwise directly or indirectly
restrains or prohibits or seeks to restrain or prohibit the
making or consummation of the Offer or the acceptance for payment
of, or payment for, any Units by the Purchaser (or any of its
affiliates), or the consummation of any subsequent merger,
consolidation, or other business combination transaction or other
transaction involving the Purchaser and the Partnership or the
Subsidiary Partnership, (ii) prohibits or restricts or seeks to
prohibit or restrict the ownership or operation by the Purchaser
(or any of its affiliates) of all or any material portion of its
own or the Partnership's business or assets, or compels or seeks
to compel the Purchaser (or any of its affiliates) to dispose of
or hold separate all or any portion of the Partnership's business
or assets, (iii) imposes or seeks to impose limitations on the
ability of the Purchaser or any of its affiliates to acquire or
hold or to exercise full rights of ownership of the Units,
including, but not limited to, the right to vote the Units
purchased by them on all matters properly presented to the
limited partners of the Partnership, (iv) imposes or seeks to
impose any limitations on the ability of the Purchaser (or any of
its affiliates) effectively to control in any respect the
business and operations of the Partnership, (v) in the sole
judgment of the

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<PAGE>
Purchaser, might result in a limitation of the benefits expected to be
derived by the Purchaser as a result of the transactions contemplated
by the Offer or the value of the Units to the Purchaser, (vi) imposes
or seeks to impose any material condition to the Offer unacceptable to
the Purchaser, or (vii) otherwise directly or indirectly relates to
the Offer or any business combination or other transaction with or
involving the Partnership or the Subsidiary Partnership or which
otherwise, in the sole judgment of the Purchaser, might adversely
affect the Purchaser, the Partnership, the Subsidiary Partnership, or
any of their respective affiliates; or

(b) any litigation, application, claim, counterclaim,
or similar proceeding shall have been threatened or commenced in
or before any domestic or foreign court, legislative body, or
governmental agency, or other regulatory or administrative agency
or commission, which, in the sole judgment of the Purchaser,
could result in any of the consequences referred to in clauses
(i) through (vii) of paragraph (a) above or which obtains or
seeks to obtain any material damages, or otherwise relates
directly or indirectly to the transactions contemplated by the
Offer or any subsequent merger, consolidation, or other business
combination or other transaction, or there has occurred a
development in any litigation, application, claim, counterclaim,
or proceeding commenced prior to the time of the commencement of
the Offer (including without limitation the litigation described
in "Special Factors -- Certain Litigation against the Purchaser
and the General Partner") which, in the sole judgment of the
Purchaser, could result in any of such consequences; or

(c) any change (or any development involving a
prospective change) shall have occurred or be threatened in the
business, financial condition, results of operations, or
prospects of the Partnership which, in the sole judgment of the
Purchaser, is, or may be, materially adverse to the Partnership,
or the Purchaser shall become aware of any fact (including
without limitation any such change or development) which, in the
sole judgment of the Purchaser, has, or may have, materially
adverse significance with respect to the Partnership; or

(d) there shall have occurred (i) the declaration of
any banking moratorium or suspension of payments in respect of
banks in the United States, (ii) any general suspension of
trading in, or limitation of prices for, securities on any United
States national securities exchange or in the over-the-counter
market, (iii) the commencement of a war, armed hostilities, or
any other national or international crisis directly or indirectly
involving the United States, (iv) any limitation (whether or not
mandatory) by any governmental, regulatory, or administrative
agency or authority on, or any event which, in the Purchaser's
sole judgment, might affect, the extension of credit by banks or
other lending institutions in the United States, (v) any
significant change in the market price of the Units or in the
general level of market prices of equity securities in the United
States or abroad that, in the sole judgment of the Purchaser,
could have a material effect on the Partnership's business,
financial condition, results of operations, or prospects or the
trading in the Units or that, in the sole judgment of the
Purchaser, makes it inadvisable to proceed with the Offer, or
(vi) in the case of any of the foregoing existing at the time of
the commencement of the Offer, in the Purchaser's sole judgment,
a material change therein; or

(e) a tender offer or exchange offer for some portion
or all of the Units shall have been commenced or publicly
proposed to be made by any other person or entity, or it shall
have been publicly disclosed or the Purchaser shall have learned
or the Purchaser shall have cause to believe that any other
person or entity shall have entered into a definitive agreement
or an agreement in principle or made a proposal with respect to a
tender offer or exchange offer for some portion or all of the
Units, a merger, consolidation, or other business combination or
sale of an RC or other assets (other than in the ordinary course
of business), or a recapitalization or other transaction outside
the ordinary course of business of the Partnership, with or
involving the Partnership or the Subsidiary Partnership or any
other transaction involving the issuance of securities of the
Partnership or the Subsidiary Partnership, or the Partnership or
the Subsidiary Partnership shall

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<PAGE>
have authorized, recommended, or proposed, or shall have announced an
intention to authorize, recommend, or propose, any other material
change in its capitalization; or

(f) the Purchaser and the General Partner shall have
reached an agreement or understanding that the Offer be
terminated or amended or the purchase or payment for Units be
postponed pursuant thereto.

The foregoing conditions may be asserted by the Purchaser regardless of the
circumstances and are for the sole benefit of the Purchaser and its
affiliates. The foregoing conditions may be waived by the Purchaser in
whole or in part at any time and from time to time in its sole discretion.
The failure by the Purchaser at any time to exercise any of the foregoing
rights will not be deemed a waiver of any other rights and each such right
will be deemed an ongoing right which may be asserted at any time and from
time to time. Any determination by the Purchaser concerning the events
described above will be final and binding upon all parties.

Distributions

The Partnership has not paid a distribution on the Units during its
four most recent fiscal years. According to the 1994 Form 10-K filed with
the Commission, the Partnership had positive cash flow in 1994 and expects
to have positive cash flow in 1995. As of the date of this Offer to
Purchase, no distributions have been paid on the Units during 1995, and the
Purchaser understands that it is the present intention of the Partnership
to apply its available cash to its ongoing expansion program. See "Special
Factors -- Expansion Program." Whether or not the Purchaser increases its
equity ownership in the Partnership, the Purchaser has no current plans or
proposals to seek to modify the Partnership's current distribution policy,
although it reserves the right to do so. Accordingly, there can be no
assurance as to whether or when, or at what levels, any future cash
distributions to Unitholders will be made.

If, on or after September 22, 1995, the Partnership should (i) split,
combine, or otherwise change the Units or its capitalization, (ii) issue or
sell any additional securities of the Partnership or otherwise cause an
increase in the number of outstanding securities of the Partnership, or
(iii) acquire currently outstanding Units or otherwise cause a reduction in
the number of outstanding Units, then, without prejudice to the Purchaser's
rights described "-- Terms of the Offer" and "-- Certain Conditions of the
Offer," the Purchaser, in its sole discretion, may make such adjustments in
the purchase price and other terms of the Offer as it deems appropriate to
reflect such split, combination, or other change, including the amount and
type of securities offered to be purchased.

If, on or after September 22, 1995, the Partnership should declare or
pay any distribution on the Units or make any distribution (including
without limitation the issuance of additional Units pursuant to a Unit
distribution or Unit split, the issuance of other securities, or the
issuance of rights for the purchase of any securities) with respect to the
Units that is payable or distributable to Unitholders of record on a date
prior to the transfer to the name of the Purchaser or its nominee or
transferee on the Partnership records of the Units purchased pursuant to
the Offer, then, without prejudice to the Purchaser's rights described
under "Terms of the Offer" and "Certain Conditions of the Offer," (i) the
purchase price per Unit payable by the Purchaser pursuant to the Offer will
be reduced by the amount of any such cash distribution in respect of the
Units and (ii) any such non-cash distribution or right to be received by
the tendering Unitholders will be received and held by the tendering
Unitholders and delivered to the Depositary for the account of the
Purchaser, accompanied by appropriate documentation of transfer. Pending
such remittance and subject to applicable law, the Purchaser will be
entitled to all rights and privileges as owner of any such non-cash
distribution or right and may withhold the entire purchase price or deduct
from the purchase price the amount or value thereof, as determined by the
Purchaser in its sole discretion.

Certain Legal Matters

Except as described below, the Purchaser is not aware of any license
or other regulatory permit which appears to be material to the business of
the Partnership and that might be adversely affected by the Purchaser's
acquisition of Units pursuant to the Offer, any approval or other action by
any domestic or foreign governmental or

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<PAGE>
administrative agency that would be required prior to the acquisition of
Units by the Purchaser pursuant to the Offer, or any state takeover statute
that is applicable to the Offer. Should any such approval or other action
be required, or any such state takeover statute be applicable, the
Purchaser will evaluate at such time whether such approval or action will
be sought or compliance with such takeover statute will be effected. There
can be no assurance that any such approval, action, or compliance, if
needed, would be obtained or effected or, if obtained or effected, would be
obtained or effected without substantial conditions or adverse
consequences. The Purchaser's obligation to purchase and pay for the
tendered Units is subject to certain conditions, including conditions
relating to the legal matters discussed herein. See "-- Certain Conditions
of the Offer."

Fees and Expenses

The Purchaser has retained American Stock Transfer & Trust Company to
act as the Depositary and MacKenzie Partners, Inc. to act as the
Information Agent in connection with the Offer. The Information Agent may
contact holders of Units by mail, telephone, telex, telegraph, and in
person and will request brokers, dealers, and other nominee Unitholders to
forward materials relating to the Offer to beneficial owners of the Units.
The Depositary and the Information Agent each will receive reasonable and
customary compensation for its services, will be reimbursed for certain
reasonable out-of-pocket expenses, and will be indemnified against certain
liabilities and expenses in connection therewith. Employees of the
Purchaser or its affiliates may make solicitations in connection with the
Offer, but they will not receive any additional compensation therefor.
Brokers, dealers, commercial banks, and trust companies will be reimbursed
by the Purchaser for customary mailing expenses incurred by them in
forwarding material to their customers.

Expenses estimated to be incurred by the Purchaser in connection with
the Offer are as follows:

Depositary and information fees . . . . . . . . . $ 25,000
Legal fees . . . . . . . . . . . . . . . . . . . 200,000
Printing, mailing and distribution expenses . . . 50,000
SEC filing fee . . . . . . . . . . . . . . . . . 2,929
Miscellaneous fees and expenses . . . . . . . . . 22,071
------

Total . . . . . . . . . . . . . . . . . . . . $300,000
=======

CERTAIN INFORMATION CONCERNING THE PARTNERSHIP

General

The Partnership is a Delaware limited partnership with its principal
executive offices located at 11320 Random Hills Road, Suite 400, Fairfax,
Virginia 20030. The Partnership was formed in 1986 for the purpose of
owning RCs developed by the Purchaser. The Partnership presently owns its
properties through the Subsidiary Partnership, which is a Delaware limited
partnership. All of the limited partners' interests in the Subsidiary
Partnership are owned by the Partnership, and the general partner of the
Subsidiary Partnership is the General Partner.

The General Partner owns a 1% general partner's interest in the
Partnership, which constitutes all of the outstanding general partnership
interests in the Partnership. The General Partner also owns a 1% general
partner's interest in the Subsidiary Partnership, constituting all of the
outstanding general partnership interests in the Subsidiary Partnership.
The Purchaser owns all of the issued and outstanding capital stock of the
General Partner and elects the General Partner's directors. Pursuant to
the Partnership Agreement, however, a majority of the members of the FRI
Board must be Independent Directors. See "Special Factors -- Certain
Litigation against the Purchaser and the General Partner" for a discussion
of certain litigation involving, among other things, the propriety under
the Partnership Agreement of the composition of the FRI Board. Neither the
Partnership nor the General Partner

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<PAGE>
employs its own management personnel and each of them relies on personnel
employed by the Purchaser. See "Special Factors -- Interests of Certain
Persons in the Offer."

The Partnership owns, through the Subsidiary Partnership, nine RCs.
The Partnership acquired the Properties (together with one additional RC,
which was subsequently sold by the Partnership to an unaffiliated third
party) from the Purchaser and its affiliates in connection with the
Partnership's formation in 1986. The Purchaser currently manages and
operates all of the Properties pursuant to the Management Agreement. See
"Special Factors -- Interests of Certain Persons in the Offer." For
additional information with respect to the Partnership's ongoing expansion
program and certain other matters relating to the Partnership, see "Special
Factors -- Expansion Program" and "-- Certain Determinations by the
Purchaser."

The Partnership is subject to the informational filing requirements of
the Exchange Act and, in accordance therewith, is required to file with the
Commission periodic reports and other information relating to its business,
financial condition, and other matters. The Partnership is required to
disclose in such reports certain information, as of particular dates,
concerning the Partnership's operating results and financial condition, the
officers and directors of the General Partner, the principal holders of the
Partnership's securities, any material interests of such persons in
transactions with the Partnership, and other matters. These reports and
other informational filings required by the Exchange Act should be
available for inspection at the public reference facilities maintained by
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and also should be available for inspection and
copying at the regional offices of the Commission located at Citicorp
Center, 500 West Madison Street, Chicago, Illinois 60611 and 7 World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material may
be obtained by mail, upon payment of the Commission's customary fees, from
the Commission's principal office at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549. Information regarding the Partnership may
also be obtained at the offices of the AMEX, 86 Trinity Place, New York,
New York 10006.

Certain of the information contained in this Offer to Purchase
concerning the Partnership and the General Partner is based upon publicly
available documents on file with the Commission. The Purchaser does not
accept any responsibility for the accuracy or completeness of such
information. See "Miscellaneous."

Financial Information

The following summary consolidated financial information relating to
the Partnership has been taken or derived from the audited consolidated
financial statements contained in the 1994 Form 10-K and the unaudited
interim consolidated financial statements in the 1995 Second Quarter
Form 10-Q. More comprehensive financial information is contained in
Annex A hereto which contains excerpts of the 1994 Form 10-K and the 1995
Second Quarter Form 10-Q, and the financial information below is qualified
by reference to such Annex A and the financial information contained
therein. The 1994 Form 10-K and the 1995 Second Quarter Form 10-Q may be
examined and copies may be obtained from the offices of the Commission as
described above. See "Special Factors -- Certain Determinations by the
Purchaser" with respect to the Partnership's budget for its fiscal year
ending December 31, 1995 and "Special Factors -- Expansion Program" with
respect to the Partnership's ongoing expansion program.

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<PAGE>
FORUM RETIREMENT PARTNERS, L.P.
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
(Dollars in thousands, except per Unit amounts and ratios)
<TABLE><CAPTION>

Six Months ended June 30, Year ended December 31,
------------------------ -----------------------
1995 1994 1994 1993
---------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Income Statement Data:
Total revenues . . . . . . . . . . . . . . . . . $ 24,611 $ 22,761 $ 47,333 $ 44,176
Income (loss) before extraordinary charge . . . . 159 105 317 (1,762)
Extraordinary charge . . . . . . . . . . . . . . - - - 2,917
(a)
Net income (loss) . . . . . . . . . . . . . . . . 159 105 317 (4,679)
Net income (loss) per Unit (b) . . . . . . . . . 0.01 0.01 0.02 (0.45)
Ratio of earnings to fixed charges . . . . . . . 1.06% 1.04% 1.06% (c)

</TABLE>

At December 31,
-------------------------
At June 30, 1995 1994 1993
---------------- ------------ ----------
<S> <C> <C> <C>
Balance Sheet Data:
Total assets . . . . . . . . . . . . . . . . . . $110,841 $111,163 $110,480
Long-term debt (d) . . . . . . . . . . . . . . . 49,482 49,934 50,707
Total partners' equity . . . . . . . . . . . . . 38,770 38,612 38,386
Net book value per Unit (b) . . . . . . . . . . . 2.50 2.49 2.48

</TABLE>

- ------------------------
(a) Reflects early extinguishment of debt.

(b) Per Unit data is based on 15,285,000 Units outstanding.

(c) For purposes of calculating this ratio, earnings includes income before
extraordinary and fixed charges, and fixed charges includes interest
expense. Earnings were inadequate to cover fixed charges by $1.8
million for the fiscal year ended December 31, 1993 (exclusive of
extraordinary items).

(d) Includes current portion of long-term debt.

CERTAIN INFORMATION CONCERNING THE PURCHASER

The Purchaser provides senior housing and healthcare services in 14
states through the ownership and/or operation of 44 senior living and
assisted living communities, including the nine communities owned by the
Partnership and two communities under construction. The principal business
of Forum A/H is to make equity investments in the Partnership.

The Purchaser was incorporated under the laws of Kentucky on
November 13, 1969, and adopted its present name and changed its corporate
domicile to Indiana on September 8, 1981. The principal executive offices
of the Purchaser and Forum A/H are located at 11320 Random Hills Road,
Suite 400, Fairfax, Virginia 22030.

On February 19, 1991, the Purchaser and certain of its affiliates (not
including the Partnership or the General Partner) voluntarily commenced
proceedings under Chapter 11 of the United States Bankruptcy Code to
reorganize and restructure their liabilities. The Purchaser emerged from
bankruptcy pursuant to a plan of reorganization on April 2, 1992.

In June 1993, the Purchaser was recapitalized in a series of
transactions pursuant to which the FGI Investors, comprised of Apollo FG
Partners, L.P. ("AFG"), Forum Holdings, L.P. ("Forum Holdings"), and
Healthcare Resources I, L.P. ("Healthcare Resources"), acquired a majority
of the Purchaser's capital stock and gained control of the Board of
Directors of the Purchaser. In November 1994, AFG and Forum Holdings
together purchased from Healthcare Resources all of the Purchaser's
securities then owned by Healthcare Resources. Based upon filings made
with the Commission by AFG and Forum Holdings, as of September 29, 1995,
(i) AFG beneficially owned and had sole dispositive power with respect to
9,428,203 shares of common stock of the Purchaser, constituting 40.6% of
the total number of such shares outstanding, and (ii) Forum Holdings
beneficially owned and had sole dispositive

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<PAGE>
power with respect to 9,428,203 shares of common stock of the Purchaser,
constituting 40.6% of the total number of such shares outstanding. As a
result of a shareholders' agreement between AFG and Forum Holdings (the
"Shareholders' Agreement"), each of AFG and Forum Holdings may be deemed to
have shared voting power with respect to, and thus to own beneficially, all
of the 18,856,406 shares of common stock of the Purchaser owned by AFG and
Forum Holdings in the aggregate, constituting 81.3% of the total number of
such shares outstanding. (The foregoing percentages are based upon
23,206,013 shares of common stock of the Purchaser outstanding, which
number includes 5,760 shares presently issuable at a nominal purchase price
to AFG and Forum Holdings pursuant to certain warrants originally issued to
the FGI Investors in connection with the recapitalization of the Purchaser
in June 1993, 149,607 shares presently issuable at a nominal purchase price
to AFG and Forum Holdings pursuant to certain warrants acquired by AFG and
Holdings from a third party in December 1994 and 550,537 shares presently
issuable at a purchase price of $3.37 per share (subject to adjustment) to
AFG and Forum Holdings pursuant to certain other warrants acquired by AFG
and Holdings from a third party in December 1994.)

The Board of Directors of the Purchaser presently consists solely of
persons designated or approved by AFG and Forum Holdings, and the executive
committee thereof consists solely of persons elected by such Board.
Pursuant to the Shareholders' Agreement, each of AFG and Forum Holdings has
agreed to use its respective best efforts to cause nominees of AFG and
Forum Holdings to be elected in all elections of directors of the Purchaser
and to vote or cause to be voted in favor of such nominees all shares of
common stock of the Purchaser over which it has voting power. Pursuant to
the Shareholders' Agreement, each of AFG and Forum Holdings has also agreed
to use its respective best efforts to cause the executive committee of the
Board of Directors of the Purchaser to consist of at least three persons,
one designee designated by each of AFG and Forum Holdings and the Chief
Executive Officer of the Purchaser, and such additional directors of the
Purchaser, if any, as shall be acceptable to each of AFG and Forum
Holdings.

Since January 1, 1993, the Purchaser, directly or indirectly through
Forum A/H, has acquired an aggregate of 9,481,712 Units, as follows:
(i) during the calendar quarter ended December 31, 1993, pursuant to the
Recapitalization Agreement Forum A/H acquired 6,500,000 Units for a capital
contribution equal to $2.00 per Unit (1,994,189 of such Units were
subsequently repurchased from Forum A/H by the Partnership for $2.00 per
Unit as provided in the Recapitalization Agreement) (see "Background of the
Offer"); (ii) during the calendar quarter ended September 30, 1994, the
Purchaser, in two separate privately negotiated transactions, purchased a
total of 2,190,712 Units at an average purchase price of approximately
$2.64 per Unit (1,040,644 of such Units were purchased at a purchase price
of $3.00 per Unit and 1,150,068 were purchased at a purchase price of
$2.3125 per Unit); and (iii) during the calendar quarter ended December 31,
1994, the Purchaser, in a single privately negotiated transaction,
purchased 791,000 Units at a purchase price of $3.00 per Unit.

As of September 29, 1995, the Purchaser beneficially owned an aggregate
of 9,427,791 Units, constituting 61.7% of the total number of Units
outstanding. At such time, the Purchaser directly owned 4,921,980 Units
(constituting 32.2% of the total number of Units outstanding), as to which
it had sole voting and disposition power, and Forum A/H, a wholly owned
subsidiary of the Purchaser, directly owned 4,505,811 Units (constituting
29.5% of the total number of Units outstanding), as to which it had sole
voting and dispositive power. The foregoing percentages are based upon a
total of 15,285,248 Units outstanding. By reason of its parent-subsidiary
relationship with Forum A/H, the Purchaser may be deemed to own
beneficially the Units owned directly by Forum A/H. Further, FGI and Forum
A/H may be deemed to constitute a "group" within the meaning of Rule 13d-5
under the Exchange Act.

Annex C hereto sets forth the following information with respect to
each of the directors and executive officers of the Purchaser and of Forum
A/H: (i) name; (ii) business address; (iii) present principal occupation
or employment and the name, principal place of business, and address of any
corporation or other organization in which such employment or occupation is
conducted; (iv) material occupations, positions, offices, or employments
during the last five years, giving the starting and ending dates of each
and the name, principal business, and address of any business corporation
or other organization in which such occupation, position, office, or
employment was carried on; and (v) citizenship. Annex D hereto sets forth
certain information concerning AFG and Forum Holdings and the following
information with respect to each of the general partners, executive
officers, directors, and principal

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<PAGE>
shareholders of AFG, Forum Holdings and certain related persons: (i) name;
(ii) business address; (iii) present principal occupation or employment and
the name, principal business, and address of any corporation or other
organization in which such employment or occupation is conducted;
(iv) material occupations, positions, offices, or employments during the
last five years, giving the starting and ending dates of each and the name,
principal business, and address of any business corporation or other
organization in which such occupation, position, office, or employment was
carried on; and (v) citizenship.

Except as disclosed in this Offer to Purchase, none of the Purchaser,
Forum A/H, nor, to the knowledge of the Purchaser, any of AFG, Forum
Holdings, or the persons listed in Annex C and Annex D hereto, or any
majority owned subsidiary or associate of the Purchaser, Forum A/H, or any
of AFG, Forum Holdings, or the persons so listed, beneficially owns or has
a right to acquire any equity securities of the Partnership, nor except as
disclosed in this Offer to Purchase, has the Purchaser, Forum A/H, or, to
the knowledge of the Purchaser, any of AFG, Forum Holdings, or the persons
listed in Annex C or Annex D, or any of the respective officers, directors,
or subsidiaries of any of the foregoing, effected any transactions in the
equity securities of the Partnership which are required to be disclosed
herein pursuant to the rules and regulations of the Commission.

Except as disclosed in this Offer to Purchase, none of the Purchaser,
Forum A/H, nor, to the knowledge of the Purchaser, any of AFG, Forum
Holdings, or the persons listed in Annex C or Annex D hereto, has any
present or proposed contract, arrangement, understanding, or relationship
with any other person with respect to any securities of the Partnership,
including, but not limited to, any contract, arrangement, understanding, or
relationship concerning the transfer or the voting of any securities of the
Partnership, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss, or the giving or withholding
of proxies. Except as disclosed herein, there have been no contacts,
negotiations, or transactions since January 1, 1992 between the Purchaser
or its subsidiaries or, to the knowledge of the Purchaser, any of AFG,
Forum Holdings, or the persons listed in Annex C or Annex D hereto, on the
one hand, and the Partnership or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, a tender offer or other
acquisition of securities, an election of directors, or a sale or other
transfer of a material amount of assets. Except as disclosed herein, none
of the Purchaser, Forum A/H, nor, to the knowledge of the Purchaser, any of
AFG, Forum Holdings, or the persons listed in Annex C or Annex D hereto,
has had any business relationships or has entered into any transactions
since January 1, 1992 with the Partnership or any of its executive
officers, directors, or affiliates which are required to be disclosed
herein pursuant to the rules and regulations of the Commission.

MISCELLANEOUS

No person has been authorized to give any information or make any
representation other than as contained in this Offer to Purchase or the
related Letter of Transmittal and, if given or made, such information or
representation must not be relied upon as having been authorized.

The Offer is being made to all Unitholders. The Purchaser is not aware
of any jurisdiction in which the making of the Offer is prohibited by
administrative or judicial action pursuant to a state statute. If the
Purchaser becomes aware of any jurisdiction where the making of the Offer
is so prohibited, the Purchaser will make a good faith effort to comply
with any such statute or seek to have such statute declared inapplicable to
the Offer. If, after such good faith effort, the Purchaser cannot comply
with any applicable statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the Unitholders in such
jurisdiction. In those jurisdictions where securities, blue sky, or other
laws require the Offer to be made by a licensed broker or dealer, the Offer
shall be deemed to be made on behalf of the Purchaser by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.

Certain of the information concerning the Partnership contained in this
Offer to Purchase has been taken from or based upon publicly available
documents and records on file with the Commission and other public sources.
Although the Purchaser does not have any knowledge that would indicate that
any statements contained herein based on such documents and records are
untrue, the Purchaser accepts no responsibility for the accuracy or
completeness

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<PAGE>
of the information contained in such documents and records, or for any
failure by the Partnership to disclose events which may have occurred or
may affect the significance or accuracy of any such information.

The Purchaser has filed with the Commission a Transaction Statement on
Schedule 13E-3 and a Tender Offer Statement on Schedule 14D-1, together
with exhibits in each case, pursuant to Rules 13e-3 and 14d-3,
respectively, under the Exchange Act, furnishing certain additional
information with respect to the Offer. Such Statements and any amendments
thereto, including exhibits, may be examined and copies may be obtained at
the same places and in the manner set forth under "Certain Information
Concerning the Partnership" in this Offer to Purchase (except that they
will not be available in the regional offices of the Commission).

FORUM GROUP, INC.

October 2, 1995

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<PAGE>
ANNEX A
-------

CONSOLIDATED FINANCIAL STATEMENTS
OF THE PARTNERSHIP

INDEX TO FINANCIAL STATEMENTS

Page
----

Audited Financial Statements:
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . A-2
Consolidated Balance Sheets as of
December 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . A-3
Consolidated Statements of Operations for the
years ended December 31, 1994, 1993 and 1992 . . . . . . . . . A-4
Consolidated Statements of Partners'
Equity for the years ended December 31, 1994,
1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . A-5
Consolidated Statements of Cash Flows for the
years ended December 31, 1994, 1993 and 1992 . . . . . . . . . A-6
Notes to Consolidated Financial Statements . . . . . . . . . . . . A-7

Unaudited Interim Financial Statements:
Condensed Consolidated Balance Sheets as of
June 30, 1995 and December 31, 1994 . . . . . . . . . . . . . . A-11
Condensed Consolidated Statements of Operations for the
three months and six months ended June 30, 1995 and 1994 . . . A-12
Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 1995 and 1994 . . . . . . . . . . . . A-13
Notes to Condensed Consolidated Financial Statements . . . . . . . A-14

A-1

<PAGE>
KPMG Peat Marwick LLP

2400 First Indiana Plaza
135 North Pennsylvania Street
Indianapolis, IN 46204-2452

Independent Auditors' Report
- ----------------------------

The Partners
Forum Retirement Partners, L.P.:

We have audited the accompanying consolidated balance sheets of Forum
Retirement Partners, L.P. and subsidiary partnerships as of December 31,
1994 and 1993 and the related consolidated statements of operations,
partners' equity and cash flows for each of the years in the three-year
period ended December 31, 1994. These consolidated financial statements
are the responsibility of the Partnership's management. Our responsibility
is to express an opinion on these consolidated financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Forum
Retirement Partners, L.P. and subsidiary partnerships as of December 31,
1994 and 1993 and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 1994 in
conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

KPMG Peat Marwick LLP
Indianapolis, Indiana
February 6, 1995

A-2

<PAGE>
FORUM RETIREMENT PARTNERS, L.P.
AND SUBSIDIARY PARTNERSHIPS

Consolidated Balance Sheets

December 31, 1994 and 1993

(in thousands)

Assets 1994 1993
------ ---------- ----------
<S> <C> <C>
Property and equipment:
Land $ 14,758 14,572
Buildings 97,918 96,473
Furniture and equipment 8,174 7,739
----- -----
120,850 118,784
Less accumulated depreciation 24,000 20,519
------ ------
Net property and equipment 96,850 98,265

Cash and cash equivalents 5,588 4,700
Accounts receivable, less allowance for doubtful
accounts of $208 and $126 2,650 2,274
Restricted cash 2,625 1,719
Deferred financing costs 2,152 2,339
Other assets 1,298 1,183
----- -----

$ 111,163 110,480
========= =======

Liabilities and Partners' Equity
--------------------------------

Long-term debt, including $927 and $773 due within one year $ 49,934 50,707
Accounts payable and accrued expenses 3,969 3,402
Management fees and amounts due to parent of general partner 1,195 638
Deferred management fees due to parent of general partner 15,780 15,780
Resident deposits 1,445 1,341
----- -----
Total liabilities
72,323 71,868
------ ------
General partner's equity in subsidiary partnership 228 226
--- ---

Partners' equity:
General partner 492 490
Limited partners (15,285 units issued and outstanding) 38,120 37,896
------ ------
Total partners' equity 38,612 38,386
------ ------

$ 111,163 110,480
========= =======

</TABLE>

See accompanying Notes to Consolidated Financial Statements.

A-3

<PAGE>
FORUM RETIREMENT PARTNERS, L.P.
AND SUBSIDIARY PARTNERSHIPS

Consolidated Statements of Operations

Years ended December 31, 1994, 1993 and 1992

(in thousands except per unit amounts)

1994 1993 1992
-------------- ---------- -----------
<S> <C> <C> <C>
Revenues:
Operating revenues $47,086 43,797 41,648
Other income 247 379 302
-------- ------- -------
Total revenues 47,333 44,176 41,950
-------- ------- -------

Costs and expenses:
Operating expenses 34,226 32,969 33,873
Management fees to parent of general partner 3,767 3,516 3,337
Litigation 146 - -
Depreciation 3,491 3,356 3,391
Interest, including amounts to parent of general
partner of $38, $50 and $68 5,384 6,106 7,510
-------- ------- -------
Total costs and expenses 47,014 45,947 48,111
-------- ------- -------

Income (loss) before general partner's
interest in income (loss) of subsidiary
partnerships and extraordinary charge 319 (1,771) (6,161)

General partner's interest in income (loss) of subsidiary
partnerships
2 (9) (49)
-------- ------- -------

Income (loss) before extraordinary charge 317 (1,762) (6,112)

Extraordinary charge - early extinguishment of debt - 2,917 -
-------- ------- -------

Net income (loss) 317 (4,679) (6,112)

General partner's interest in net income (loss) 3 (47) (61)
-------- ------- -------

Limited partners' interest in net income (loss) $314 (4,632) (6,051)
======== ======= =======
Average number of units outstanding 15,285 10,317 8,785
======== ======= =======
Income (loss) per limited partner unit:
Income (loss) before extraordinary charge $0.02 (0.17) (0.69)

Extraordinary charge - (0.28) -
-------- ------- -------

Net income (loss) $0.02 (0.45) (0.69)
======== ======= =======
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

A-4

<PAGE>
FORUM RETIREMENT PARTNERS, L.P.
AND SUBSIDIARY PARTNERSHIPS

Consolidated Statements of Partners' Equity

Years ended December 31, 1994, 1993 and 1992

(in thousands)

General Limited
partner partners
------------- ------------

<S> <C> <C>
Balances at January 1, 1992 $470 35,829

Net loss (61) (6,051)
---- -------

Balances at December 31, 1992 409 29,778

Capital contributions from issuance of
6,500 units, net of offering costs of $253 128 12,750

Net loss (47) (4,632)
---- -------

Balances at December 31, 1993 $490 37,896

Offering costs (1) (90)
Net income 3 314
---- -------

Balances at December 31, 1994 $492 38,120
==== =======

Accumulated balances:
Capital contributions 1,173 116,279
Offering expenses (4) (6,715)
Cash distributions (255) (29,679)
Accumulated losses (422) (41,765)
---- -------

Balances at December 31, 1994 $492 38,120
==== =======
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

A-5

<PAGE>
FORUM RETIREMENT PARTNERS, L.P.
AND SUBSIDIARY PARTNERSHIPS

Consolidated Statements of Cash Flows

Years ended December 31, 1994, 1993 and 1992

(in thousands)

<TABLE><CAPTION>
1994 1993 1992
------------ ---------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 317 (4,679) (6,112)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation of property and equipment 3,491 3,356 3,391
Amortization of deferred financing costs 352 479 339
Amortization of discount on long-term debt - - 1,433
Extraordinary charge - 2,917 -
Deferred management fees due to parent of
general partner - 3,516 3,337
Management fees due to parent of general partner 981 - -
Accrued revenues and expenses, net (207) (4,210) 1,125
Other 107 121 (172)
------- ------- ---------

Net cash provided by operating activities 5,041 1,500 3,341
------- ------- ---------

Cash flows from investing activities:
Additions to property and equipment (1,853) (1,210) (813)
Proceeds from sale of retirement community
- - 16,695
------- ------- ---------

Net cash provided (used) by investing
activities (1,853) (1,210) 15,882
------- ------- ---------

Cash flows from financing activities:
Reduction of long-term debt (949) (59,260) (17,134)
Proceeds from long-term debt - 50,707 -
Yield maintenance premium and other expenses
in connection with refinancing - (2,602) -
Deferred financing costs (293) (2,436) (95)
Capital contributions, net - 12,939 -
Offering costs (152) (192) -
Net decrease (increase) in restricted cash
(906) 174 843
------- ------- ---------

Net cash used by financing activities (2,300) (478) (16,386)
------- ------- ---------

Net increase (decrease) in cash and cash equivalents 888 (188) 2,837
Cash and cash equivalents at beginning of year
4,700 4,888 2,051
------- ------- ---------

Cash and cash equivalents at end of year $5,588 4,700 4,888
======= ======= =========

See accompanying Notes to Consolidated Financial Statements.

</TABLE>

A-6

<PAGE>
FORUM RETIREMENT PARTNERS, L.P.
AND SUBSIDIARY PARTNERSHIPS

Notes to Consolidated Financial Statements

(1) Summary of Significant Accounting Policies
------------------------------------------

Organization
------------

Forum Retirement Partners, L.P. and a subsidiary partnership (the
"Partnership") own nine retirement communities ("RCs") which were
acquired from Forum Group, Inc. ("Forum Group"). Forum Group was
engaged to manage, and continues to manage, the RCs for the
Partnership.

The general partner of the Partnership, a wholly owned subsidiary of
Forum Group, receives 1% of all distributions of net cash flow until
the limited partners receive cumulative distributions equal to a 12%
cumulative annual return on the initial offering price. Thereafter,
the general partner is to receive 30% of all distributions of net cash
flow. Forum Group owned 62.1% of the Partnership at December 31,
1994.

On February 19, 1991, Forum Group commenced reorganization proceedings
under Chapter 11 of the United States Bankruptcy Code, and on April 2,
1992, Forum Group's plan of reorganization was confirmed by the
Bankruptcy Court. In February 1993, the Partnership and Forum Group
entered into a settlement agreement disposing of certain claims which
arose during the reorganization proceedings. As part of that
settlement, the Partnership received a cash payment of $125,000 and
63,612 shares of Forum Group common stock which were sold in August
1993 for $230,000, resulting in a gain of $130,000.

To facilitate the refinancing of its long-term debt, the Partnership
and Forum Group entered into a Recapitalization Agreement (the
"Recapitalization Agreement") in October 1993, which provided for,
among other things, an immediate infusion of $13 million of equity
into the Partnership by a wholly-owned subsidiary of Forum Group. The
Partnership applied the $13 million of proceeds to the partial
prepayment of the outstanding principal balance of the secured bank
credit agreement that was to mature on December 31, 1993. To repay
the remaining amount due on the secured bank credit agreement and
other indebtedness of the Partnership, on December 28, 1993, the
Partnership obtained $50.7 million in new mortgage financing (see
note 3).

In order that the other limited partners' interests are not diluted as
a result of the Recapitalization Agreement, in January 1994, the
Partnership offered all of the other limited partners the right to
purchase 0.74 of a Partnership unit for each unit owned on October 18,
1993, at $2.00 per unit. Proceeds from the exercise of these rights
were used to repurchase 1,994,189 units from the wholly owned
subsidiary of Forum Group at $2.00 per unit. The Partnership incurred
costs of $91,000 and $253,000 in 1994 and 1993, respectively, as a
result of the offering.

Principles of Consolidation
---------------------------

The consolidated financial statements include the accounts of the
Partnership and its affiliated operating partnership in which the
Partnership has a 99% limited partner's interest and the general
partner of the Partnership owns the remaining 1% interest. The
effects of all significant intercompany accounts and transactions have
been eliminated in consolidation.

A-7 (Continued)

<PAGE>
FORUM RETIREMENT PARTNERS, L.P.
AND SUBSIDIARY PARTNERSHIPS

Notes to Consolidated Financial Statements

Property and Equipment
----------------------

Property and equipment are carried at cost. Depreciation is computed
on the straight-line method at rates calculated to amortize the costs
over the estimated useful lives of the related assets. The
Partnership records a provision for value impairment whenever the
estimated future cash flows from the property's operations or
projected sale are less than the property's net carrying value.

Deferred Costs
--------------

Financing costs are amortized to interest expense on the straight-line
method over the term of the related loan agreement.

Operating Revenues
------------------

Routine service revenues are generated from monthly charges for
independent living units and daily charges for assisted living suites
and nursing beds, and are recognized monthly based on the terms of the
residents' agreements. Advance payments received for services are
deferred until the services are provided. Ancillary service revenues
are generated on a "fee for service" basis for supplementary items
requested by residents, and are recognized as the services are
provided.

Operating revenues include amounts estimated by management to be
reimbursable by Medicare, Medicaid and other cost-based programs.
Cost-based reimbursements are subject to audit by agencies
administering the programs, and provisions are made for potential
adjustments that may result. To the extent those provisions vary from
settlements, revenues are charged or credited when the adjustments
become final. A change in the estimate of amounts reimbursable by
third party payors from prior years resulted in the recognition of
$210,000 and $379,000 of additional operating revenues for 1994 and
1993, respectively.

Income Taxes
------------

As partnerships, the allocated share of income or loss for the year is
includable in the income tax returns of the partners; accordingly,
income taxes are not reflected in the accompanying consolidated
financial statements.

The tax basis of the Partnership's assets are approximately
$12,000,000 less than the basis reported for financial statement
purposes, primarily due to the carryover tax basis of the affiliated
operating partnerships and differences in tax reporting methods.

Per Unit Data
-------------

The net income (loss) per unit is based on the limited partners'
interest in the net income (loss) divided by the average number of
limited partner units outstanding.

Reclassifications
-----------------

Certain amounts in the 1993 financial statements have been
reclassified to conform with the 1994 presentation.

A-8 (Continued)

<PAGE>
FORUM RETIREMENT PARTNERS, L.P.
AND SUBSIDIARY PARTNERSHIPS

Notes to Consolidated Financial Statements

(2) Cash
----

Restricted cash includes required property, working capital and other
reserves amounting to $1,434,000 and $612,000 at December 31, 1994 and
1993, respectively, and residents' deposits of $1,191,000 and
$1,107,000 at December 31, 1994 and 1993, respectively.

Cash and cash equivalents include cash and highly liquid investments
with a maturity of three months or less.

(3) Long-term Debt
--------------

On December 28, 1993, the Partnership entered into a new mortgage loan
agreement for $50,707,000 and the proceeds were used to retire the
split coupon mortgage notes and the bank credit facility and to pay
the related fees, yield maintenance premium and expenses. The new
loan requires monthly payments of principal (based on a 20-year
amortization) and interest at 9.93% (assuming servicing costs of
0.20%) to maturity on January 1, 2001. The loan agreement prohibits
prepayment for three years and requires payment of a yield maintenance
premium, as defined, if prepaid thereafter. Additional principal
payments are required if the debt service coverage ratio, as defined,
is below specified levels. The loan is secured by all of the
Partnership's RCs. Scheduled principal payments on the mortgage loan
as of December 31, 1994, are $927,000 in 1995, $1,023,000 in 1996,
$1,129,000 in 1997, $1,247,000 in 1998 and $1,376,000 in 1999.

The prepayment of the split coupon mortgage notes required a yield
maintenance premium of $2,142,000 which is included in extraordinary
charge in the accompanying consolidated statements of operations. The
split coupon mortgage notes included a prohibition of cash
distributions and required the maintenance of cash escrow and reserve
funds. Base interest rates ranged from 7.75% to 9.25%, payable
monthly, and additional interest rates ranged from 2.25% to 3.00%,
payable monthly from net operating cash flow for the previous month,
as defined, or upon maturity on June 30, 1996, for an effective rate
of 11.46%. Prior to a restructuring in 1992, the split coupon
mortgage notes had an effective interest rate of 11.75%. Interest
payments of $255,000 were due monthly at 6% per annum through July
1992, with principal and interest payments of $527,000 due monthly at
11.75% thereafter to maturity on July 1, 1996.

Interest under the bank credit facility was payable quarterly through
March 1993, and monthly thereafter, at the bank's reference rate plus
2%.

Amounts due to parent of general partner include long-term debt of
$457,000 and $632,000 at December 31, 1994 and 1993, respectively,
with a blended interest rate of 7.2% and maturities in varying amounts
through January 31, 2004.

Interest paid during 1994, 1993 and 1992 totaled $4,679,000,
$5,872,000 and $6,732,000, respectively.

A-9 (Continued)

<PAGE>
FORUM RETIREMENT PARTNERS, L.P.
AND SUBSIDIARY PARTNERSHIPS

Notes to Consolidated Financial Statements

(4) Commitments and Contingencies
-----------------------------

In connection with the formation of the Partnership, the Partnership
entered into a long-term management agreement with Forum Group which
requires fees of 8% of gross operating revenues. Through December 31,
1993, the agreement provided for the deferral of payment of the fees
if net cash flow was not adequate to make certain distributions to
limited partners. Since cash flow was not adequate to make the
distributions, the $15,780,000 of management fees earned since
formation of the Partnership through December 31, 1993 was deferred.
The Partnership also reimbursed Forum Group for general and
administrative costs incurred on behalf of the Partnership, which
amounted to $180,000 in 1994 and 1993 and $176,000 in 1992.

On January 24, 1994, the Russell F. Knapp Revokable Trust (the
"Plaintiff"), filed a complaint (the "Complaint") in the United States
District Court for the Northern District of Iowa against the
Partnership's general partner alleging breach of the partnership
agreement, breach of fiduciary duty, fraud and civil conspiracy. The
Complaint alleges, among other things, that the Plaintiff holds a
substantial number of Units, that the Board of Directors of the
general partner is not comprised of a majority of independent
directors, as allegedly required by the partnership agreement and as
represented in the 1986 Prospectus for the Partnership's initial
public offering, and that the general partner's Board of Directors has
approved and/or acquiesced in 8% management fees being charged by
Forum Group under the management agreement. The Complaint further
alleges that the "industry standard" for such fees is 4% thereby
resulting in an "overcharge" to the Partnership estimated by the
Plaintiff at $1.8 million per annum, beginning in 1994. The Plaintiff
is seeking the restoration of certain former directors to the Board of
Directors of the general partner and the removal of certain other
directors from that Board, an injunction prohibiting the payment of 8%
management fees and unspecified compensatory and punitive damages.
The general partner intends vigorously to defend against this
litigation. The Partnership, in accordance with the management
agreement, reimbursed the general partner for $146,000 of litigation
costs relating to this claim in 1994.

(5) Employee Benefit Plan
---------------------

Effective April 1, 1993, Forum Group established a defined
contribution profit sharing plan, including features under Section
401(k) of the Internal Revenue Code, which will provide retirement
benefits to its eligible employees. The Partnership contributes to
the plan for participants employed at the RCs.

The Partnership has expensed $43,000 and $34,000 in 1994 and 1993,
respectively, relating to its portion of employee contributions under
this plan.

A-10

<PAGE>
FORUM RETIREMENT PARTNERS, L.P. AND SUBSIDIARY PARTNERSHIPS
CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, December 31,
1995 1994
---------------- ----------------
(Without Audit) (Note)
ASSETS (in thousands)
------
<S> <C> <C>
Property and equipment:
Land $ 14,816 $ 14,758
Buildings 98,477 97,918
Furniture and equipment 8,513 8,174
-------- ---------
121,806 120,850
Less accumulated depreciation 25,781 24,000
-------- ---------
NET PROPERTY AND EQUIPMENT 96,025 96,850

Cash and cash equivalents 6,273 5,588
Accounts receivable, less allowances for doubtful
accounts of $208 and $208 1,535 2,650
Restricted cash 2,928 2,625
Deferred costs, net of accumulated amortization
of $532 and $352 2,021 2,152
Other assets 2,059 1,298
-------- ---------

TOTAL ASSETS $110,841 $ 111,163
======== =========

LIABILITIES AND PARTNERS' EQUITY
--------------------------------

Long-term debt, including $974 and $927 due
within one year $ 49,482 $ 49,934
Accounts payable and accrued expenses 3,730 3,969
Management fees and amounts due to parent
of general partner 1,453 1,195
Deferred management fees due to parent of
general partner 15,780 15,780
Resident deposits 1,397 1,445
-------- ---------

TOTAL LIABILITIES 71,842 72,323
-------- ---------

General partner's equity in subsidiary
partnership 229 228
-------- ---------

Partners' equity:
General partner 492 492
Limited partners (15,285 units issued and
outstanding) 38,278 38,120
-------- ---------

TOTAL PARTNERS' EQUITY 38,770 38,612
-------- ---------

$110,841 $ 111,163
======== =========

</TABLE>

See Notes to Condensed Consolidated Financial Statements.

A-11

<PAGE>
FORUM RETIREMENT PARTNERS, L.P. AND SUBSIDIARY PARTNERSHIPS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Without Audit)

Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1995 1994 1995 1994
------------ ---------- ---------- ----------
(in thousands except per unit amounts)
<S> <C> <C> <C>
Revenues:
Routine $10,946 $10,352 $21,567 $20,502
Ancillary 1,424 1,040 2,891 2,165
Other income 80 47 153 94
------- ------- ------- -------

TOTAL REVENUES
12,450 11,439 24,611 22,761
------- ------- ------- -------

Costs and expenses:
Routine expenses 7,754 7,068 15,357 14,087
Ancillary costs 1,137 904 2,339 1,808
Management fees to parent
of general partner 991 914 1,957 1,818
General and administrative 162 223 287 420
Litigation 29 20 68 42
Depreciation 897 926 1,782 1,783
Interest, including amounts to
parent of general partner
of $7, $10, $15 and $21 1,327 1,349 2,661 2,697
------- ------- ------- -------
-----
TOTAL COSTS AND EXPENSES 12,297 11,404 24,451 22,655
------- ------- ------- -------

Income before general partner's interest in income
of subsidiary partnership 153 35 160 106

General partner's interest in income
of subsidiary partnership 1 0 1 1
------- ------- ------- -------

NET INCOME 152 35 159 105

General partner's interest in
net income 1 0 1 1
------- ------- ------- -------

Limited partners' interest in
net income $ 151 $ 35 $ 158 $ 104
======= ======= ======= =======

Average number of units
outstanding 15,285 15,285 15,285 15,285
======= ======= ======= =======

Net income per unit $ 0.01 $ 0.00 $ 0.01 $ 0.01
======= ======= ======= =======

</TABLE>

See Notes to Condensed Consolidated Financial Statements.

A-12

<PAGE>
FORUM RETIREMENT PARTNERS, L.P. AND SUBSIDIARY PARTNERSHIPS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Without Audit)

Six Months Ended
June 30,
--------------------
1995 1994
-------- --------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 159 $ 105
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation of property and equipment 1,782 1,783
Amortization of deferred financing costs 179 173
Accrued management fees currently due to
parent of general partner 9 914
Other accrued revenues and expenses, net 426 7
------- ------

NET CASH PROVIDED BY OPERATING ACTIVITIES
2,555 2,982
------- ------

Cash flows from investing activities:
Additions to property and equipment (957) (815)
------- ------

NET CASH USED BY INVESTING ACTIVITIES (957) (815)
------- ------

Cash flows from financing activities:
Reduction of long-term debt (452) (343)
Net increase in restricted cash (351) (729)
Payment on note payable to parent of
general partner (62) (99)
Deferred loan costs (48) (162)
Other
0 (90)
------- ------

NET CASH USED BY FINANCING ACTIVITIES (913) (1,423)
------- ------

Net increase in cash and cash equivalents 685 744

Cash and cash equivalents at beginning of period 5,588 4,700
------- ------

Cash and cash equivalents at end of period $ 6,273 $ 5,444
======= =======

</TABLE>

See Notes to Condensed Consolidated Financial Statements.

A-13

<PAGE>
FORUM RETIREMENT PARTNERS, L.P. AND SUBSIDIARY PARTNERSHIPS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Without Audit)
June 30, 1995

Note A - Basis of Presentation
- ------------------------------
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the six-month period ended June 30, 1995 are not necessarily
indicative of the results that may be expected for the year ending
December 31, 1995. For further information, refer to the consolidated
financial statements of Forum Retirement Partners, L.P. (the "Partnership")
as of and for the year ended December 31, 1994, and the footnotes thereto,
included in the Partnership's Annual Report on Form 10-K for the year ended
December 31, 1994 (the "1994 10-K").

Note B - General Partner's Interest in Subsidiary Partnership
- -------------------------------------------------------------
Forum Retirement, Inc., a wholly-owned subsidiary of Forum Group, Inc.
("Forum Group"), is the general partner of the Partnership (the "General
Partner") and owns a one percent interest in the Partnership and in a
subsidiary operating partnership in which the Partnership owns a ninety-
nine percent interest. The General Partner's interest in the subsidiary
operating partnership is reflected in the statements of operations as a
reduction of the income or loss of the Partnership. The Partnership is a
62.1% owned subsidiary of Forum Group.

A-14

<PAGE>
ANNEX B
-------

TEXT OF LETTER DATED AUGUST 28, 1995
FROM THE PURCHASER TO THE FRI BOARD
AND ATTACHMENTS THERETO

The text of the letter dated August 28, 1995 from the Purchaser to the
FRI Board was as follows:

"As you are aware, Forum Group, Inc., through a
combination of purchasing FRP partnership units
pursuant to FRP's 1993 Rights Offering and negotiating
subsequent purchases directly with certain unitholders,
has increased its ownership stake in FRP to
approximately 63.4%. While FGI has not made any
decision to pursue any particular course of action at
this time, for a number of reasons (including:
(1) simplification of FRP's ownership and capital
structure and (2) that the expansions of the FRP
communities could be accelerated with access to FGI's
capital), FGI is exploring the possibility of making an
offer to purchase the approximately 5,600,000 FRP
partnership units which it does not presently own.
Inasmuch as FRI's directors would need to express an
opinion on any such offer (or determine that it could
not do so), the purpose of this memo is to provide
FRI's Board of Directors background information
regarding a hypothetical case in which Forum Group
would tender for all remaining FRP partnership units at
a price of $2.50 per unit. (Any such offer would, of
course, be subject to conditions, possibly including a
condition that a high percentage of the outstanding
units be tendered.) In this regard, I have attached
the following:

- A chart showing the 20 day average closing
price for FRP. As shown in this chart, an
offering price of $2.50 per unit would
represent a 23% premium to FRP's $2.033 per
unit average trading price over the past 20
days.

- A chart showing two hypothetical valuation
cases: (1) a "real estate" cap rate case,
using a cap rate of 11% (which we believe
represents a weighted average of the cap
rates at which the FRP facilities would sell
in the current) which indicates a value of
$1.49 per LP unit and (2) an EBITDA multiple
case, using and EBITDA multiple of 8.8x (the
average multiple at which long-term care
companies . . . primarily nursing home
operators, many of which also have some
assisted living and retirement housing
units), which indicates a value of $2.14 per
LP unit.

As indicated above, FGI has not made a decision at this
time and this letter should not be interpreted as an
offer or proposal related thereto. However, before
making a decision in this regard, we wanted to review
this matter with the FRP Board. We look forward to
receiving your comments and feedback."

The attachments to the letter follow.

B-1

<PAGE>

FRP PRICING HISTORY

Closing
Trading Day Date Price
----------- ---- --------
1 07/28/95 $2.063
2 07/31/95 2.000
3 08/01/95 2.000
4 08/02/95 2.000
5 08/03/95 2.063
6 08/04/95 2.000
7 08/07/95 2.063
8 08/08/95 2.000
9 08/09/95 2.000
10 08/10/95 2.000
11 08/11/95 2.000
12 08/14/95 2.063
13 08/15/95 2.063
14 08/16/95 2.063
15 08/17/95 2.094
16 08/18/95 2.063
17 08/21/95 2.063
18 08/22/95 2.063
19 08/23/95 2.000
20 08/24/95 2.000
--------------------
20 Day Avg. $2.033
=====================

B-2

<PAGE>
FORUM RETIREMENT PARTNERS
Equity Valuation Comparison

REAL ESTATE CAP RATE VALUATION
------------------------------
<TABLE><CAPTION>

4 Mos End
July 31, 1995 Annualized Per Unit
------------- ---------- --------
<S> <C> <C> <C>
Units/Beds 1,624 1,624
Revenues 16,310,216 48,930,648 30,130
Expenses (11,962,907) (35,888 721) (22,099)
---------- ---------- ------
Op. Income 4,347,309 13,041,927 8,031

Less 8% Mgmt. Fee (3,914,452) (2,410)
Less Cap Ex at $1000/Unit (1,624,000) (1,000)
--------- -----
NOI 7,503,475 4,620
Cap Rate 11.0%
Gross Value 68,213,411 42,003
Less Selling Expenses at 1.5% (1,023,201) (630)
Less Total Long Term Debt at 7/31 (49,789,283) (30,658)
Plus Unrestricted Cash 5,376,953 3,311
---------- ------
Equity Value 22,777,879 14,026
Equity Value per LP Unit $1.49

EBITDA VALUATION
----------------

7 Mos End
July 31, 1995 Annualized Per Unit
------------- ---------- --------
EBITDA 5,112,368 8,764,059 5,397

Long Term Care EBITDA Multiple* 8.80

Enterprise Value 77,123,723 47,490
Less Long Term Debt (49,789,283) (30,658)
Plus Unrestricted Cash 5,376,953 3,311
---------- ------
Equity Value 32,711,393 20,142
Equity Value per LP Unit $2.14

</TABLE>

*Dean Witter Long Term Care Average EBITDA Multiple, August 3, 1995

B-3

<PAGE>
ANNEX C
-------

CERTAIN INFORMATION WITH RESPECT TO
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER AND FORUM A/H
---------------------------------------------------------------

THE PURCHASER
- -------------

Directors. Certain information with respect to each of the directors
of the Purchaser is set forth below. Each of the directors is a United
States citizen.

Laurence M. Berg has been an associate of Apollo Advisors, L.P.
----------------
("Apollo Advisors"), which, together with an affiliate, acts as managing
general partner of Apollo Investment Fund, L.P., AIF II, L.P., and Apollo
Investment Fund III, L.P., private securities investment funds, and Lion
Advisors, L.P. ("Lion Advisors"), which serves as financial advisor and
representative for certain institutional investors with respect to
securities investments since 1992; theretofore, he was employed by Drexel
Burnham Lambert Incorporated ("DBL"), an investment firm. The principal
business address of each of Apollo Advisors and Lion Advisors is Two
Manhattanville Road, Purchase, New York 10577. Mr. Berg's business
address, is 1999 Avenue of the Stars, Suite 1900, Los Angeles, California
90067.

Peter P. Copses has been an officer of Apollo Advisors and Lion
---------------
Advisors since 1990; theretofore, he was employed by Donaldson, Lufkin and
Jenrette Securities Corporation, an investment firm. The principal
business address of each of Apollo Advisors and Lion Advisors is Two
Manhattanville Road, Purchase, New York 10577. Mr. Copses' business
address is 1999 Avenue of the Stars, Los Angeles, California 90067.

Daniel A. Decker has been a principal of The Hampstead Group, L.L.C.
----------------
("Hampstead"), a privately held investment company, since 1990;
theretofore, he was a partner in the law firm of Decker, Hardt, Munsch and
Dinan, P.C. The principal business address of Hampstead, which is also
Mr. Decker's business address, is 4200 Texas Commerce Tower West, 2200 Ross
Avenue, Dallas, Texas 75201. See also Annex C.

James E. Eden has been the owner of James E. Eden & Associates, a
-------------
consulting firm specializing in the senior living and long-term care
industry, President of Eden & Associates, Inc., a company engaged in the
senior living and long-term care industry, and Chairman and Chief Executive
Officer of Oakwood Living Centers, Inc., a company which owns and operates
nursing homes and rehabilitation centers, since 1992; theretofore, he was
employed by Marriott Corporation, a company which owns and operates senior
living facilities ("Marriott"), in various capacities including Executive
Vice President and Vice President and General Manager, Senior Living
Services Division. The principal business address of each of James E.
Eden & Associates, Inc., Eden & Associates, Inc. and Oakwood Living
Centers, Inc., which is also Mr. Eden's business address, is 13728 Canal
Vista Court, P.O. Box 59022, Potomac, Maryland 20859.

Mark L. Pacala has been Chairman of the Board of the Purchaser since
--------------
1995 and has been the President and Chief Executive Officer of the
Purchaser since 1994; theretofore, he was Senior Vice President and General
Manager of The Walt Disney Company, a company which owns and operates theme
parks and resorts. Mr. Pacala's business address is 11320 Random Hills
Road, Suite 400, Fairfax, Virginia 22030.

Kurt C. Read has been a Vice President of Hampstead since 1990;
------------
theretofore, he was an officer of Columbia Realty Group, a real estate
investment advisory firm. The principal business address of Hampstead,
which is also Mr. Read's business address, is 4200 Texas Commerce Tower
West, 2200 Ross Avenue, Dallas, Texas 75201.

Antony P. Ressler has been one of the principals of both Apollo
-----------------
Advisors and Lion Advisors since they were founded in 1990; theretofore, he
was Senior Vice President of DBL. The principal business address of each
of Apollo Advisors and Lion Advisors is Two Manhattanville Road, Purchase,
New York 10577. Mr. Ressler's business address is 1999 Avenue of the
Stars, Los Angeles, California 90067.

Robert A. Whitman has been President and Co-Chief Executive Officer of
-----------------
Hampstead since 1991; theretofore, he was Managing Partner and Chief
Executive Officer of Trammell Crow Ventures, the real estate

C-1

<PAGE>
investment, banking and investment management unit of Trammell Crow
Company. Mr. Whitman served as President and Chief Executive Officer of
the Purchaser from 1993 to 1994 and as Chairman of the Board of the
Purchaser from 1993 until 1995. The principal business address of
Hampstead, which is also Mr. Whitman's business address, is 4200 Texas
Commerce Tower West, 2200 Ross Avenue, Dallas, Texas 75201. See also
Annex C.

Margaret A. Wylde, Ph.D. has been President of ProMatura Group, a
------------------------
division of the Institute of Technology Development which provides
marketing research, planning, product development and product testing
services to businesses serving seniors, and Chairman of the Board of
LifeSpec Cabinet Systems, Inc. ("LifeSpec"), a manufacturer of cabinetry
designed for use in senior housing, since prior to 1990. The principal
business address of ProMatura Group, which is also Dr. Wylde's business
address, is 428 N. Lamar, Oxford, Mississippi 38655, and the principal
business address of LifeSpec is 100 LifeSpec Drive, Oxford, Mississippi
38655.

Executive Officers. Certain information with respect to each of the
executive officers of the Purchaser who is not also a director of the
Purchaser is set forth below. Each of such individuals is a United States
citizen. The business address of each such individual is 11320 Random
Hills Road, Suite 400, Fairfax, Virginia 22030.

James R. Foulger has been Senior Vice President - Acquisitions of the
----------------
Purchaser since 1995; theretofore, he was President of Autumn America
Retirement, Ltd., a company providing acquisition and management services
to owners of senior living facilities.

Richard A. Huber has been Vice President - Operations Finance of the
----------------
Purchaser since 1993; theretofore, he was Director - Operations Accounting
and Analysis, Senior Living Services Division of Marriott.

Dennis L. Lehman has been Senior Vice President and Chief Financial
----------------
Officer of the Purchaser since 1995; theretofore, he was Senior Vice
President - Finance and Chief Financial Officer of Continental Medical
Systems, Inc., a company which provides medical rehabilitation services.

Brian C. Swinton has been Senior Vice President - Product Development,
----------------
Research and Marketing of the Purchaser since 1994; theretofore, he was
Vice President, Senior Living Services Division of Marriott.

FORUM A/H
- ---------

Certain information with respect to each of the executive officers and
directors of Forum A/H is set forth below. Each of such individuals is a
United States citizen. The business address of each such individual is
11320 Random Hills Road, Suite 400, Fairfax, Virginia 22030.

Richard A. Huber is a director and Secretary of Forum A/H. Mr. Huber
----------------
has been Vice President - Operations Finance of the Purchaser since 1993;
theretofore, he was Director - Operations Accounting and Analysis, Senior
Living Services Division of Marriott.

Dennis L. Lehman is a director and Vice President and Treasurer of
----------------
Forum A/H. Mr. Lehman has been Senior Vice President and Chief Financial
Officer of the Purchaser since 1995; theretofore, he was Senior Vice
President - Finance and Chief Financial Officer of Continental Medical
Systems, Inc., a company which provides medical rehabilitation services.

Mark L. Pacala is a director and President of Forum A/H. Mr. Pacala
--------------
has been Chairman of the Board of Purchaser since 1995 and the President
and Chief Executive Officer of the Purchaser since 1994; theretofore, he
was Senior Vice President and General Manager of The Walt Disney Company, a
company which, among other things, owns and operates theme parks and
resorts.

C-2

<PAGE>
ANNEX D
-------

CERTAIN INFORMATION WITH RESPECT TO
AFG, FORUM HOLDINGS, AND CERTAIN OTHER PERSONS
----------------------------------------------

AFG
- ---

The principal business of AFG, a Delaware limited partnership, is to
make equity investments in the Purchaser. The sole general partner of AFG
is Apollo Investment Fund, L.P., a Delaware limited partnership ("AIF"),
which is principally engaged in the business of making investments in
securities. The managing general partner of AIF is Apollo Advisors, L.P.,
a Delaware limited partnership ("Apollo Advisors"). The administrative
partner of AIF is Apollo Fund Administration Limited, a Cayman Islands
corporation ("Administration"). Apollo Advisors is principally engaged in
the business of serving as managing general partner of AIF and another
investment fund. Administration is principally engaged in the business of
serving as administrative general partner of AIF and another investment
fund. AIF has no other general partners. The sole general partner of
Apollo Advisors is Apollo Capital Management, Inc. ("Apollo Management"), a
Delaware corporation. The respective addresses of the principal executive
office of each of AFG, AIF, Apollo Advisors, Administration, and Apollo
Management are: for AFG, AIF and Administration, c/o CIBC Bank and Trust
Company (Cayman) Limited, Edward Street, Georgetown, Grand Cayman, Cayman
Islands, British West Indies; and for Apollo Advisors and Apollo
Management, Two Manhattanville Road, Purchase, New York 10577.

Certain information with respect to the general partners, executive
officers, directors, and principal shareholders of AFG, AIF, Apollo
Advisors, Administration, and Apollo Management is set forth below.

The directors of Apollo Management are Leon D. Black and John J.
Hannan, each of whom is a United States citizen.

Leon D. Black has been a founding principal of Apollo Advisors since
August 1990. Mr. Black's business address is Two Manhattanville Road,
Purchase, New York 10577.

John J. Hannan has been a founding principal of Apollo Advisors since
August 1990. Mr. Hannan's business address is Two Manhattanville Road,
Purchase, New York 10577.

Each of Peter Henry Larder, Michael Francis Benedict Gillhooly, Ian
Thomas Patrick, and Martin William Laidlaw is a British citizen and serves
as a director of Administration. Each of the above four individuals is
principally employed by CIBC Bank and Trust Company (Cayman) Limited
("CIBC") in the following positions: Mr. Larder, Managing Director; Mr.
Gillhooly, Deputy Managing Director; Mr. Patrick, Manager-Accounting
Services; and Mr. Laidlaw, Senior Fund Accountant. CIBC is a Cayman
Islands corporation which is principally engaged in the provision of trust,
banking, and corporate administration services, the principal address of
which is Edward Street, Grand Cayman, Cayman Islands, British West Indies.
CIBC provides accounting, administrative and other services to
Administration pursuant to a contract. Messrs. Black and Hannan are the
beneficial owners of the stock of Administration.

FORUM HOLDINGS
- --------------

The principal business of Forum Holdings, a Texas limited partnership,
is to make equity investments in the Purchaser. HRP Management II, Ltd., a
Texas limited partnership ("HRP"), is the general partner of Forum
Holdings. The principal business of HRP is to act as the sole general
partner of Forum Holdings. HH Genpar Partners, a Texas general partnership
("HH Genpar"), is, and its principal business is to act as, the managing
general partner of HRP (and various other partnerships). Hampstead
Associates, Inc., a Texas corporation ("Associates"), is, and its principal
business is to act as, the managing general partner of HH Genpar. RAW
Genpar, Inc., a Texas corporation ("RAW Genpar"), and InCap, Inc., a Texas
corporation ("InCap"), are the only other general partners of HH Genpar.
The principal business of each of RAW Genpar and InCap is to invest in HH
Genpar. The address

D-1

<PAGE>
of the principal executive office of Forum Holdings, HRP, HH Genpar,
Associates, RAW Genpar, and InCap is 4200 Texas Commerce Tower West, 2200
Ross Avenue, Dallas, Texas 75201.

Certain information with respect to the general partners, executive
officers, and principal shareholders of Forum Holdings, HRP, HH Genpar,
Associates, RAW Genpar, and InCap is set forth below.

The principal occupation of each of Donald J. McNamara, Robert A.
Whitman, and Daniel A. Decker, each of whom is a United States citizen, is
to be employed by The Hampstead Group, L.L.C. ("Hampstead"). Mr. McNamara
is the Chairman and Co-Chief Executive Officer of Hampstead, Mr. Whitman is
the President and Co-Chief Executive Officer of Hampstead, and Mr. Decker
is Managing Director and Executive Vice President of Hampstead. The
principal business of Hampstead is providing real estate investment and
management services. The business address of Hampstead and of each such
individual is 4200 Texas Commerce Tower West, 2001 Ross Avenue, Dallas,
Texas 75201.

Mr. McNamara is the sole owner and director of Associates. Mr.
McNamara has been the Chairman and Co-Chief Executive Officer of Hampstead
since 1992. Theretofore, Mr. McNamara served as the President, Chairman,
and Chief Executive Officer of Hampstead. Mr. McNamara is a director of
the General Partner.

Mr. Whitman is the sole owner and director of RAW Genpar. Mr. Whitman
has been the President and Co-Chief Executive Officer of Hampstead since
1992. Theretofore, Mr. Whitman served as Managing Partner and Chief
Executive Officer for Trammell Crow Ventures, the real estate investment,
banking and investment management unit of the Trammell Crow Company. Mr.
Whitman served as President and Chief Executive Officer of the Purchaser
from 1993 to 1994 and as the Chairman of the Board of the Purchaser since
1993 to 1995.

Mr. Decker is the sole owner and director of InCap. Mr. Decker has
been a principal of Hampstead since 1990. Theretofore, Mr. Decker was a
partner in the law firm of Decker, Hardt, Kopf, Harr, Munsch & Dinan, P.C.

D-2

<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and Depositary Receipts for Units and any other required
documents should be sent by each Unitholder or his broker, dealer,
commercial bank, trust company, or nominee to the Depositary at the address
set forth below:

____________________

The Depositary for the Offer is:

AMERICAN STOCK TRANSFER & TRUST COMPANY
__________

By Mail, Hand or Overnight
Courier:

American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005

By Facsimile Transmission:
(718) 234-5001

For Information or Confirmation by Telephone:
(718) 921-8200

____________________

Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent at the telephone numbers
and location listed below. You may also contact your broker, dealer,
commercial bank, or trust company for assistance concerning this Offer.

The Information Agent for the Offer is:

MACKENZIE PARTNERS, INC.

156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
Call Toll Free (800) 322-2885

Exhibit (a)(2)

LETTER OF TRANSMITTAL
To Tender Preferred Depositary Units
Representing Preferred Limited Partners' Interests
in
FORUM RETIREMENT PARTNERS, L.P.
Pursuant to the Offer to Purchase
dated October 2, 1995
by
FORUM GROUP, INC.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, OCTOBER 31, 1995, UNLESS THE OFFER IS EXTENDED.

The Depositary for the Offer is:

AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail, Hand or Overnight By Facsimile Transmission:
Courier:
(For Eligible Institutions Only)
American Stock Transfer & Trust (718) 234-5001
Company For Confirmation:
40 Wall Street, 46th Floor (718) 921-8200
New York, New York 10005

Delivery of this instrument to an address other than as set forth
above, or transmission of instructions to a facsimile number other than as
set forth above, will not constitute a valid delivery.

The instructions accompanying this Letter of Transmittal should be read
carefully before this Letter of Transmittal is completed.

This Letter of Transmittal is to be used if (i) depositary receipts
("Depositary Receipts") representing Units (as defined below) are to be
delivered herewith or (ii) unless an Agent's Message (as defined in the
Offer to Purchase (as defined below)) is utilized, if delivery of the Units
is to be made by book-entry transfer to the account maintained by the
Depositary at The Depository Trust Company, Midwest Securities Trust
Company, or Philadelphia Depository Trust Company (collectively, the "Book-
Entry Transfer Facilities") as set forth under the caption "The Offer --
Procedure for Tendering Units" in the Offer to Purchase.

Unitholders who desire to tender Units and who cannot deliver their
Depositary Receipts (as defined in the Offer to Purchase) and all other
required documents to the Depositary on or prior to the Expiration Date (as
defined in the Offer to Purchase), or who cannot complete the procedure for
book-entry transfer of such Units on a timely basis, must tender their
Units pursuant to the guaranteed delivery procedure set forth under the
caption "The Offer -- Procedure for Tendering Units" in the Offer to
Purchase. See Instruction 2.

The name(s) and address(es) of the registered holder(s) should be
printed below, if they are not already printed below, exactly as they
appear on the Depositary Receipt(s) representing the Units tendered
herewith. The Depositary Receipt(s) and the number of Units that the
registered holder(s) wish(es) to tender should be indicated in the
appropriate boxes below.
================================================================================
DESCRIPTION OF UNITS TENDERED
(See Instructions)
- --------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Units Tendered
Holder(s) (Attach additional list if
(Please fill in exactly as name(s) necessary)
appear(s) on certificate(s))
- --------------------------------------------------------------------------------
Number
of Units
Depositary Represented Number of
Receipt by Units
Number(s)* Depositary Tendered**
Receipt(s)*
- --------------------------------------------------------------------------------

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

- --------------------------------------------------------------------------------
Total units

*Need not be completed by Unitholders delivering Units by book-entry
transfer.

** Unless otherwise indicated, it will be assumed that all Units
represented by any Depositary Receipts delivered to the Depositary
are being tendered. See Instruction 4.

================================================================================

<PAGE>
/ / CHECK HERE IF TENDERED UNITS ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-
ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS
IN A BOOK-ENTRY TRANSFER FACILITY MAY DELIVER UNITS BY BOOK-ENTRY
TRANSFER):

Name of Tendering Institution
-------------------------------------------

Check box of applicable Book-Entry Transfer Facility:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company

Account Number
----------------------------------------------------------

Transaction Code Number
-------------------------------------------------

/ / CHECK HERE IF TENDERED UNITS ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE
THE FOLLOWING:

Name(s) of Registered Owner(s)
------------------------------------------

Window Ticket Number (if any)
-------------------------------------------

Date of Execution of Notice of Guaranteed Delivery
----------------------

Name of Institution which Guaranteed Delivery
---------------------------

If delivered by book-entry transfer, check box of applicable Book-Entry
Transfer Facility:

/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company

Account Number
----------------------------------------------------------

Transaction Code Number (if delivered by Book-Entry Transfer)
-----------

NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:

The undersigned hereby tenders to Forum Group, Inc., an Indiana
corporation (the "Purchaser"), the above-described preferred depositary
units (the "Units") representing preferred limited partners' interests in
Forum Retirement Partners, L.P., a Delaware limited partnership (the
"Partnership"), pursuant to the Purchaser's offer to purchase any and all
outstanding Units at $2.50 per Unit, net to the seller in cash, on the
terms and subject to the conditions set forth in the Offer to Purchase
dated October 2, 1995 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which together constitute
the "Offer").

Subject to and effective upon acceptance for payment of the Units
tendered herewith in accordance with the terms of the Offer (including, if
the Offer is extended or amended, the terms or conditions of any such
extension or amendment), the undersigned hereby sells, assigns, and
transfers to or upon the order of the Purchaser all right, title, and
interest in and to all of the Units that are being tendered hereby and any
and all distributions (including without limitation the issuance of
additional Units, other securities, or rights for the purchase of any
security and/or property) in respect of such Units that are declared or
paid on or after September 22, 1995 and are payable or distributable to
Unitholders of record on a date prior to the transfer into the name of the
Purchaser or its nominees or transferees on the Partnership's transfer
records of the Units accepted for payment pursuant to the Offer
(collectively, "Distributions"), and hereby irrevocably constitutes and
appoints the Depositary the true and lawful agent and attorney-in-fact of
the undersigned with respect to such Units (and any Distributions), with
full power of substitution and resubstitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Depositary Receipts representing such Units (and any Distributions), or
transfer ownership of such Units (and any Distributions) on the account
books maintained by a Book-Entry Transfer Facility, together, in any such
case, with all accompanying evidences of transfer and authenticity, to or
upon the order of the Purchaser; (ii) present Depositary Receipts
representing such Units (and any Distributions) for transfer on the books
of the
-2-

<PAGE>
Partnership; and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Units (and any Distributions), all
in accordance with the terms of the Offer.

The undersigned hereby irrevocably appoints Peter P. Copses, Mark L.
Pacala, and Robert A. Whitman, and each of them, or any other designee of
the Purchaser, the attorneys and proxies of the undersigned, each with full
power of substitution, to vote in such manner as each such attorney and
proxy or his substitute shall in his sole discretion deem proper, to
execute any written consent as each such attorney and proxy or his
substitute shall in his sole discretion deem proper and otherwise to act
with respect to all of the Units (and any Distributions) tendered hereby
which have been accepted for payment by the Purchaser prior to the time of
such vote, consent, or other action. This power of attorney and proxy is
coupled with an interest in the Units tendered hereby, is irrevocable, and
is granted in consideration of, and is effective upon, the acceptance for
payment of such Units by the Purchaser in accordance with the terms of the
Offer. Such acceptance for payment shall revoke all powers of attorney and
proxies given by the undersigned at any time with respect to such Units
(and any Distributions) and no subsequent powers of attorney or proxies
will be given with respect thereto by the undersigned (and, if given, will
be deemed ineffective). The undersigned understands that the Purchaser
reserves the right to require that, in order for Units to be validly
tendered, immediately upon the Purchaser's acceptance for payment of such
Units, the Purchaser must be able to exercise full voting rights and other
rights of a record and beneficial holder with respect to such Units and any
securities received through Distributions, including without limitation
voting at a meeting of Unitholders or acting by written consent.

The undersigned hereby represents and warrants that: (i) the
undersigned has full power and authority to tender, sell, assign, and
transfer the Units tendered hereby; and (ii) when the same are accepted for
payment by the Purchaser, the Purchaser will acquire good, marketable, and
unencumbered title thereto, free and clear of all liens, restrictions,
charges, and encumbrances, and the same will not be subject to any adverse
claim. The undersigned, upon request, will execute and deliver any
additional documents the Depositary or the Purchaser deems necessary or
desirable to complete the assignment, transfer, and purchase of the Units
(and any Distributions) tendered hereby. In addition, the undersigned will
promptly remit and transfer to the Depositary for the account of the
Purchaser any and all Distributions in respect of the Units tendered
hereby, accompanied by appropriate documentation of transfer and, pending
remittance or appropriate assurance thereof, the Purchaser will be entitled
to all rights and privileges as owner of any such Distributions and may
withhold the entire purchase price or deduct from the purchase price of
Units tendered hereby the amount or value thereof, as determined by the
Purchaser in its sole discretion.

The undersigned agrees and acknowledges that, upon acceptance for
payment of the Units tendered hereby by the Purchaser in accordance with
the terms of the Offer, the undersigned will be deemed to have released the
Purchaser, Forum Retirement, Inc., the general partner of the Partnership,
and their respective stockholders, affiliates, directors, officers,
employees, agents, and representatives from any and all claims, causes of
action, and liabilities, known or unknown, arising from or relating to the
business and affairs of, or any transactions by or involving, or the
purchase and ownership of securities of, the Partnership, from the
beginning of time through the date on which the Units tendered herewith are
accepted for payment in accordance with the terms of the Offer, including
without limitation any claim, cause of action, or liability arising from or
relating to the subject matter of the litigation described in the Offer to
Purchaser under the caption "Special Factors -- Certain Litigation against
the Purchaser and the General Partner." As described in the Offer to
Purchase, tendering Unitholders may be waiving significant rights,
including their right to participate in any judgment for monetary damages
or in any monetary or other settlement.

The undersigned understands that the valid tender of Units pursuant to
any one of the procedures described under the caption "The Offer --
Procedure for Tendering Units" in the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the
undersigned and the Purchaser on the terms and subject to the conditions of
the Offer. The undersigned recognizes that, under certain circumstances
set forth in the Offer to Purchase, the Purchaser may terminate or amend
the Offer or may not be required to accept for payment any of the Units
tendered herewith.

All authority herein conferred or herein agreed to be conferred shall
not be affected by, and shall survive, the death or incapacity of the
undersigned, and any obligation of the undersigned hereunder shall be
binding upon the heirs, personal representatives, successors, and assigns
of the undersigned.

Please issue the check for the purchase price of the Units purchased in
the name(s) of the undersigned. Unless otherwise indicated under "Special
Delivery Instructions," please mail the check for the purchase price and/or
any Depositary Receipt(s) evidencing any Units not tendered or not accepted
for payment (and accompanying documents, as appropriate) to the undersigned
at the address appearing below the undersigned's signature. In the case of
book-entry delivery of Units, please credit the account maintained by the
Book-Entry Transfer Facility indicated above with any Units not accepted
for payment.

IF ANY SURRENDERED UNITS ARE REGISTERED IN DIFFERENT NAMES, IT WILL BE
NECESSARY TO COMPLETE, SIGN, AND SUBMIT AS MANY SEPARATE COPIES OF THIS
LETTER OF TRANSMITTAL AS THERE ARE DIFFERENT REGISTRATIONS.

-3-

<PAGE>

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

SPECIAL DELIVERY INSTRUCTIONS
(Also Complete Substitute W-9 and FIRPTA Affidavit Below)
(See Instructions 1, 3, and 5)

To be completed ONLY if Depositary Receipts representing Units not
tendered or not accepted for payment and/or the check for the purchase
price of Units accepted for payment are to be sent to someone other
than the undersigned or to the undersigned at an address other than
that appearing below the undersigned's signature.

Mail: [ ] Check and/or [ ] Depositary Receipt(s) to:

Name:
---------------------------------------------------------------
(Please Print)

Address:
-------------------------------------------------------------

---------------------------------------------------------------
(Include Zip Code)
- --------------------------------------------------------------------------------

-4-

<PAGE>

- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(Also Complete Substitute W-9 and FIRPTA Affidavit Below)
(See Instructions 1, 2, and 3 and the following paragraph)
X ,
-------------------------------- ------------------------------------

X ,
-------------------------------- ------------------------------------
Signature(s) of Owner(s) Date

Area Code and Tel. No.:
--------------------------------------------

(Must be signed by the registered holder(s) exactly as the name(s)
appear(s) on the Depositary Receipt(s) representing Units or on a
security position listing or by person(s) authorized to become
registered holder(s) by Depositary Receipts and documents transmitted
herewith. If signature is by a trustee, executor, administrator,
guardian, officer, or other person acting in a fiduciary or
representative capacity, please describe such capacity (e.g., set forth
full title). See Instructions 2 and 3.)

Name(s):
-------------------------------------------------------------

-------------------------------------------------------------
(Please Type or Print)

Capacity:
-------------------------------------------------------------

Address:
-------------------------------------------------------------

-------------------------------------------------------------
(Include Zip Code)

SIGNATURE GUARANTEE
(If required by Instruction 1)
Signature(s) Guaranteed by
an Eligible Institution:
----------------------------------------------
(Authorized Signature)

----------------------------------------------------------
(Title)

----------------------------------------------------------
(Name of Firm)

----------------------------------------------------------
(Address)

----------------------------------------------------------
(Area Code and Telephone No.)

Dated:
---------------------------------------------------

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

-5-

<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer

1. Guarantee of Signature(s). No signature guarantee is required on this
Letter of Transmittal if (a) this Letter of Transmittal is signed by the
registered holder(s) of the Units (which term, for purposes of this
document, shall include any participant in a Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of such
Units) tendered herewith, unless such holder(s) has completed the box
entitled "Special Delivery Instructions" above or (b) such Units are
tendered for the account of a financial institution that is a participant
in the Securities Transfer Agents Medallion Program, the Stock Exchange
Medallion Program or the New York Stock Exchange, Inc. Medallion Signature
Program (each an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 3.

2. Delivery of this Letter of Transmittal and the Unit(s). This Letter of
Transmittal is to be completed by Unitholders either if Depositary Receipts
are to be forwarded herewith or, unless an Agent's Message is utilized, if
delivery of Units is to be made pursuant to the procedures for book-entry
transfer set forth under the caption "The Offer -- Procedure for Tendering
Units" in the Offer to Purchase. For Units to be validly tendered pursuant
to the Offer, (a) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees,
or an Agent's Message in the case of a book-entry transfer, and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at its address set forth herein and either Depositary Receipts
in proper form for transfer must be received by the Depositary at such
address or a book-entry transfer of such Units into the Depositary's
account at a Book-Entry Transfer Facility must be confirmed, in each case
prior to the Expiration Date (as defined in the Offer to Purchase) or (b)
the tendering Unitholder must comply with the guaranteed delivery procedure
set forth below.
Unitholders whose Depositary Receipts are not immediately available or
who cannot deliver their Depositary Receipts and all other required
documents to the Depositary on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis,
may tender their Units pursuant to the guaranteed delivery procedures set
forth under the caption "The Offer -- Procedure for Tendering Units" in the
Offer to Purchase. Pursuant to such procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and
duly executed Notice of Guaranteed Delivery, substantially in the form
provided by the Purchaser, must be received by the Depositary prior to the
Expiration Date, and (iii) the Depositary Receipts for all physically
delivered Units in proper form for transfer, or book-entry transfer of such
Units into the Depositary's account at a Book-Entry Transfer Facility, as
the case may be, together with a properly completed and duly executed
Letter of Transmittal or facsimile thereof, with any required signature
guarantees, or an Agent's Message in the case of a book-entry transfer, and
any other documents required by this Letter of Transmittal, must be
received by the Depositary within five business days after the date of such
Notice of Guaranteed Delivery, all as provided in the Offer to Purchase
under the caption "The Offer -- Procedure for Tendering Units." This Letter
of Transmittal is to be completed by Unitholders either if Depositary
Receipts are to be forwarded herewith or if delivery of Units is to be made
pursuant to the procedures for book-entry transfer set forth under the
caption "The Offer -- Procedure for Tendering Units" in the Offer to
Purchase.
The method of delivery of Units and all other required documents is at
the election and risk of the tendering Unitholder. If delivery is by mail,
registered mail with return receipt requested, properly insured, is
recommended.

No alternative, conditional, or contingent tenders will be accepted and
no fractional Units will be purchased. All tendering Unitholders, by
execution of this Letter of Transmittal (or facsimile hereof), waive any
right to receive any notice of the acceptance of their Units for payment.
None of the Purchaser, the Depositary, the Information Agent, or any other
person is obligated to give notice of defects or irregularities in any
tender, nor will any of them incur any liability for failure to give any
such notice.
3. Signature(s) on Letter of Transmittal; Endorsement(s) and Instruments of
Transfer. (a) If this Letter of Transmittal is signed by the registered
holder(s) of the Units tendered hereby, the signature(s) must correspond
with the name(s) as written on the face of the Depositary Receipts without
alteration, enlargement, or any change whatsoever.
(b) If any of the Unit(s) are held of record by two or more persons,
all such persons must sign this Letter of Transmittal.

(c) If any of the Unit(s) are registered in different names on several
Depositary Receipts, it will be necessary to complete, sign, and submit as
many separate Letters of Transmittal and any necessary accompanying
documents as there are different registrations of Depositary Receipts.

(d) If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Depositary Receipts listed, the Depositary
Receipts must be endorsed or accompanied by appropriate written instruments
of transfer satisfactory to the Depositary, and in either case, signed
exactly as the name(s) of the registered holder(s)

-6-

<PAGE>
appear(s) on such Depositary Receipts. Signatures on any such Depositary
Receipts or written instruments of transfer must be guaranteed by an
Eligible Institution (unless signed by an Eligible Institution).

(e) If this Letter of Transmittal or any Depositary Receipts or
written instruments of transfer are signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or
other person acting in a fiduciary or representative capacity, such person
should so indicate when signing, and proper evidence satisfactory to the
Purchaser of the authority of such person to so act must be submitted with
this Letter of Transmittal.

4. Partial Tenders. (Not applicable to Unitholders who tender by book-
entry transfer.) If fewer than all the Units evidenced by any Depositary
Receipts submitted are to be tendered, fill in the number of Units that are
to be tendered in the box entitled "Number of Units Tendered." In such
case, new Depositary Receipt(s) for the remainder of the Units that were
evidenced by the Depositary Receipt(s) will be issued in the name of the
person signing this Letter of Transmittal and, unless otherwise provided in
the box of this Letter of Transmittal entitled "Special Delivery
Instructions," will be mailed to the person signing this Letter of
Transmittal at the address set forth below such person's signature. All
Units represented by Depositary Receipts delivered to the Depositary will
be deemed to have been tendered unless otherwise indicated.

5. Special Delivery Instructions. If Depositary Receipts representing
Units not tendered or not accepted for payment and/or the check for the
purchase price of Units accepted for payment are to be sent to someone
other than the person signing this Letter of Transmittal or to the person
signing the Letter of Transmittal at an address other than that set forth
below such person's signature, the box of this Letter of Transmittal
entitled "Special Delivery Instructions" should be completed.

6. Transfer Taxes. The Purchaser will pay all transfer taxes, if any,
applicable to the transfer of Units to it pursuant to the Offer. If,
however, tendered Depositary Receipts are registered in the name of any
person(s) other than the person(s) signing this Letter of Transmittal, and
accordingly the check for the purchase price is to be issued, or Depositary
Receipts for Units not tendered or not accepted for payment are to be
registered, in the name of the person(s) signing this Letter of Transmittal
and not the registered holder(s), the amount of any transfer taxes (whether
imposed on the registered holder(s) or the person(s) signing this Letter of
Transmittal) payable on account of the transfer to the person(s) signing
this Letter of Transmittal will be deducted from the purchase price unless
satisfactory evidence of payment of such taxes, or exemption therefrom, is
submitted. Except as provided in this Subsection 6, it will not be
necessary for transfer tax stamps or funds to cover such stamps to be
provided with this Letter of Transmittal.

7. Waiver of Conditions. The Purchaser reserves the absolute right to
waive any of the specified conditions to the Offer.

8. Mutilated, Lost, Stolen, or Destroyed Depositary Receipts. If any
Depositary Receipt representing Units has been mutilated, lost, stolen, or
destroyed, the Unitholder should promptly notify the Depositary as
indicated above for further instructions.

9. Requests for Assistance or Additional Copies. Questions and requests
for assistance or additional copies of this Letter of Transmittal, the
Notice of Guaranteed Delivery, and Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 should be directed to
MacKenzie Partners, Inc., the Information Agent for the Offer, at the
telephone numbers and address set forth below or from your broker, dealer,
commercial bank, trust company, or other nominee.

IMPORTANT TAX INFORMATION

Backup Withholding. Federal income tax law requires that a Unitholder
whose tendered Units are accepted for payment provide the Depositary with
such Unitholder's correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9, which in the case of a surrendering Unitholder who is
an individual is his or her social security number, and to certify that the
Unitholder is not subject to backup withholding. If the Depositary is not
provided with the correct TIN, such Unitholder may be subject to a $50
penalty imposed by the Internal Revenue Service (the "IRS"). In addition,
payments that are made to such Unitholder may be subject to 31% backup
withholding.

Certain Unitholders (including, among others, corporations and certain
foreign persons) are not subject to backup withholding and reporting
requirements and should indicate their status by writing "exempt" across
the face of the Substitute Form W-9. In order for a foreign person to
qualify as an exempt recipient, the Unitholder must submit a Form W-8,
signed under penalties of perjury, attesting to that individual's exempt
status. A Form W-8 can be obtained from the Depositary. See the enclosed
"Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.

-7-

<PAGE>
If backup withholding applies, the Depositary is required to withhold
31% of any payment made to the Unitholder. Backup withholding is not an
additional tax. Rather, the federal income tax liability of persons
subject to backup withholding will be reduced by the amount of such withholding.
If backup withholding results in an overpayment of taxes, a refund may be
obtained from the IRS.

Purpose of Substitute Form W-9. To prevent backup withholding, each
Unitholder tendering Units must provide such Unitholder's correct TIN by
completing the form below, certifying that the TIN provided on the
Substitute Form W-9 is correct (or that such Unitholder is awaiting a TIN)
and that the Unitholder is not subject to backup withholding because (i)
the Unitholder is exempt from backup withholding, or (ii) the Unitholder
has not been notified by the IRS that the Unitholder is subject to backup
withholding as a result of a failure to report all interest or dividends,
or (iii) the IRS has notified the Unitholder that the Unitholder is no
longer subject to backup withholding.

The Unitholder is required to give the TIN (e.g., the social security
number or employer identification number) of the record owner of the
tendered Units or of the most recent transferee of the tendered Units as
evidenced by endorsements on the Depositary Receipts representing such
Units or any accompanying instruments of transfer. If the Units are in
more than one name or are not in the name of the actual owner, consult the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for additional information on which TIN to report.
The box in Part 2 of the Substitute Form W-9 may be checked if you have not
been issued a TIN and have applied for a TIN or intend to apply for a TIN
in the near future. If the box in Part 2 is checked and the Depositary is
not provided with a TIN within 60 days, backup withholding will begin and
continue until you furnish your TIN to the Depositary.

FIRPTA Withholding. To avoid potential withholding of tax in an amount
equal to 10% of the purchase price of Units accepted for payment, including
the amount of any liabilities of the Partnership allocable to such Units,
each Unitholder must provide the Depositary with an affidavit (the "FIRPTA
Affidavit") stating under penalty of perjury such Unitholder's TIN, that
the Unitholder is not a foreign person, and such person's address. FIRPTA
Affidavits for both individuals and entities are set forth below.

-8-

<PAGE>

<TABLE>

<S> <C>
PAYOR'S NAME: AMERICAN STOCK TRANSFER & TRUST COMPANY

SUBSTITUTE PART 1-PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND TIN:
CERTIFY BY SIGNING AND DATING BELOW ---------------------
Form W-9 Social Security Number
or Employee
Identification Number
Department of the Treasury
PART 2-
Internal Revenue Service Awaiting TIN / /

PART 3-CERTIFICATION: Under the penalties of perjury, I certify that (1) the number
shown on this form is my correct taxpayer identification number (or I am waiting
for a number to be issued to me) and (2) I am not subject to backup withholding
because (a) I am exempt from backup withholding, or (b) I have not been notified
by the Internal Revenue Service (the "IRS") that I am subject to backup withholding
as a result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding. (You
Payor's Request for Taxpayer must cross out Item (2) above if you have been notified by the IRS that you
Identification Number (TIN) are currently subject to backup withholding because of underreporting interest
or dividends on your tax return. However, if after being notified by the IRS
that you were subject to backup withholding you received another notification
from the IRS that you are no longer subject to backup withholding, do not cross
out Item (2).)
Signature: Date:
----------------------------------- ------------------------------

- -----------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT
TO THE OFFER. PLEASE REVIEW THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS.

- ------------------------------------------------------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 2 OF SUBSTITUTE FORM W-9

CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I
have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near
future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of all
reportable payments made to me will be withheld, but that such withheld amounts will be paid to me if I provide a taxpayer
identification number within 60 days from the date of this certificate.

---------------------------------------------------------------------- ---------------------------------------------------
Signature Date

</TABLE>

-9-

<PAGE>

FIRPTA Non-Foreign Unitholder Certificate:
for Individual Use

Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg.
1.1445-11T(d), a transferee must withhold tax equal to 10 percent of the
amount realized with respect to certain transfers of an interest in a
partnership in which 50 percent of more of the value of the gross assets
consists of U.S. real property interests plus cash or cash equivalents if
the holder of the partnership interest is a foreign person. To inform the
Purchaser that no withholding is required with respect to my interest in
the Partnership, I, ______________________________ (name of Unitholder),
hereby certify the following:

1. I am a U.S. resident for purposes of U.S. income taxation
(as that term is defined in the Internal Revenue Code and Income Tax
Regulations);

2. My U.S. taxpayer identification number (Social Security
Number) is _____-_____-_______;
and
3. My home address is
_____________________________________________________________.

Under penalty of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true,
correct, and complete.
Signed:
___________________________________________

Print Name:
_______________________________________
Dated:
____________________________________________

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN WITHHOLDING OF
10% OF THE AMOUNT REALIZED BY YOU PURSUANT TO THE OFFER.
In case of problem, the Depositary should contact:

Name:______________________________________

Telephone Number: (____)_____________________

-10-

<PAGE>

FIRPTA Non-Foreign Unitholder Certificate:
for Entity Unitholder Use

Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg.
1.1445-11T(d), a transferee must withhold tax equal to 10 percent of the
amount realized with respect to certain transfers of an interest in a
partnership in which 50 percent of more of the value of the gross assets
consists of U.S. real property interests plus cash or cash equivalents if
the holder of the partnership interest is a foreign person. To inform the
Purchaser that no withholding is required with respect to the undersigned's
interest in it, the undersigned hereby certifies the following on behalf of
the undersigned:
1. The undersigned is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are
defined in the Internal Revenue Code and Income Tax Regulations);

2. The undersigned's U.S. employer identification number is
__________________________; and

3. The undersigned's office and place of incorporation (if
applicable) is/are
--------------------------------------------------

---------------------------------------------------------------------
.
---------------------------------------------------------------------
Under penalty of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true,
correct, and complete, and I further declare that I have authority to sign
this document of behalf of the undersigned.

Name of Entity:
____________________________________

Signed:
___________________________________________

Print Name:
_______________________________________

Title:
_____________________________________________

Dated:
____________________________________________

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN WITHHOLDING OF
10% OF THE AMOUNT REALIZED BY YOU PURSUANT TO THE OFFER.

In case of problem, the Depositary should contact:

Name:______________________________________

Telephone Number: (____)_____________________

Name of Entity: _____________________________

-11-

<PAGE>

Any questions or requests for assistance or additional copies of the
Offer to Purchase, this Letter of Transmittal, and the Notice of Guaranteed
Delivery may be directed to the Information Agent at the telephone numbers
and address set forth below. You may also contact your broker, dealer,
commercial bank, trust company, or other nominee for assistance this Offer.

The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.

156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
Call Toll Free (800) 322-2885

Exhibit (a)(3)

NOTICE OF GUARANTEED DELIVERY
for
Tender of Preferred Depositary Units
Representing Preferred Limited Partners' Interests
in
FORUM RETIREMENT PARTNERS, L.P.

This form or one substantially equivalent hereto must be used to
accept the Offer (as defined below) if depositary receipts for preferred
depositary units (the "Units") representing preferred limited partners'
interests in Forum Retirement Partners, L.P., a Delaware limited
partnership, are not immediately available or time will not permit all
required documents to reach the Depositary prior to the Expiration Date (as
defined under the caption "The Offer -- Terms of the Offer" in the Offer to
Purchase (as defined below)) or if the procedure for book-entry transfer
cannot be completed on a timely basis. Such form may be delivered by hand
or sent by telegram, facsimile transmission, or mail to the Depositary and
must include a guarantee by an Eligible Institution (as defined under the
caption "The Offer -- Procedure for Tendering Units" in the Offer to
Purchase).

The Depositary for the Offer is:

American Stock Transfer & Trust Company

By Hand, Mail or Overnight Courier:
40 Wall Street, 46th Floor
New York, New York 10005

By Facsimile Transmission:
(For Eligible Institutions Only)
(718) 234-5001

For Information or
Confirmation by Telephone:
(718) 921-8200

DELIVERY OF THIS INSTRUMENT TO AN ADDRESS
OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE
NUMBER OTHER THAN AS SET FORTH ABOVE
DOES NOT CONSTITUTE A VALID DELIVERY.

This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible
Institution under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter
of Transmittal.

<PAGE>

Ladies and Gentlemen:

The undersigned hereby tenders to Forum Group, Inc., an Indiana
corporation, on the terms and subject to the conditions set forth in its
Offer to Purchase dated October 2, 1995 (the "Offer to Purchase"), and the
related Letter of Transmittal (which together constitute the "Offer"),
receipt of which is hereby acknowledged, the number of Units indicated
below pursuant to the guaranteed delivery procedures set forth under the
caption "The Offer -- Procedure for Tendering Units" in the Offer to
Purchase.

(Please Type or Print)

Number of Units: Name(s):
------------- ---------------------

Depositary Receipt No(s). (if
------------------------------
available):
------------------
Address:
---------------------

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

------------------------------
Zip Code
------------------------------
Area Code and
If Units will be delivered by Telephone Number:
------------
book-entry transfer, check one
box: Signature(s):
----------------
/ / The Depository Trust
Company
------------------------------
/ / Midwest Securities Trust
Company
/ / The Philadelphia
Depository Trust Company

Account Number:
--------------

Dated:
------------------------

GUARANTEE
(not to be used for signature guarantee)
The undersigned, a financial institution that is a participant in the
Securities Transfer Agent Medallion Program, the Stock Exchange Medallion
Program, or the New York Stock Exchange, Inc. Medallion Signature Program,
hereby guarantees to deliver to the Depositary the depositary receipts
representing the Units tendered hereby, in proper form for transfer, or a
Book-Entry Confirmation (as defined in "The Offer -- Acceptance for Payment
and Payment for Units" in the Offer to Purchase) with respect to such
Units, together with a properly completed and duly executed Letter of
Transmittal or facsimile thereof, with any required signature guarantees,
or an Agent's Message (as defined in "The Offer -- Acceptance for Payment
and Payment for Units" in the Offer to Purchase) in the case of a
book-entry transfer, and any other required documents, all within five
business days after the date hereof.

------------------------------ ------------------------------
Name of Firm Authorized Signature

------------------------------ ------------------------------
Address Name (Please Type or Print)

------------------------------ ------------------------------
City, State Zip Code Title

------------------------------ ------------------------------
Area Code and Telephone Number Date

DO NOT SEND DEPOSITARY RECEIPTS WITH THIS FORM. DEPOSITARY
RECEIPTS SHOULD BE SENT WITH THE LETTER OF TRANSMITTAL

-2-

Exhibit (a)(4)

Offer to Purchase for Cash
Any and All Outstanding Preferred Depositary Units
Representing Preferred Limited Partners' Interests
in
FORUM RETIREMENT PARTNERS, L.P.
at
$2.50 Net Per Unit
by
FORUM GROUP, INC.

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

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, OCTOBER 31, 1995, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------

October 2, 1995

To Brokers, Dealers, Commercial Banks,
Trust Companies, and Other Nominees:

We are enclosing the material listed below relating to the offer by
Forum Group, Inc., an Indiana corporation (the "Purchaser"), to purchase
any and all of the outstanding preferred depositary units (the "Units")
representing preferred limited partners' interests in Forum Retirement
Partners, L.P., a Delaware limited partnership (the "Partnership"), at
$2.50 per Unit, net to the seller in cash, on the terms and subject to the
conditions set forth in the Offer to Purchase dated October 2, 1995 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which
together constitute the "Offer").

We are asking you to contact your clients for whom you hold Units
registered in your name (or in the name of your nominee) or who hold Units
registered in their own names. Please bring the Offer to their attention
as promptly as possible.

Enclosed are copies of the following documents:

1. The Offer to Purchase dated October 2, 1995;

2. The Letter of Transmittal to be used by holders of Units to
tender Units;

3. A form of letter which may be sent to your clients for whose
accounts you hold Units registered in your name or the name of
your nominee, with space provided for obtaining such clients'
instructions with regard to the Offer;

4. Notice of Guaranteed Delivery;

5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and

6. Return envelope addressed to American Stock Transfer & Trust
Company, the Depositary for the Offer.

<PAGE>

WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE
NOTE THAT, UNLESS EXTENDED, THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AS 12:00
MIDNIGHT, NEW YORK CITY TIME, ON OCTOBER 31, 1995.

The Purchaser will not pay any fees or commissions to any broker or
dealer or other person (other than the Depositary and the Information Agent
for the Offer) for soliciting tenders of Units pursuant to the Offer. You
will be reimbursed for customary mailing and handling expenses incurred by
you in forwarding any of the enclosed materials to your clients. The
Purchaser will pay all transfer taxes applicable to the purchase of Units
pursuant to the Offer, except as set forth in Instruction 6 of the Letter
of Transmittal.

Any requests for additional copies of the enclosed material and any
inquiries you may have with respect to the Offer should be addressed to
MacKenzie Partners, Inc., the Information Agent for the Offer, at the
telephone numbers and address set forth on the back cover of the Offer to
Purchase.

Very truly yours,

FORUM GROUP, INC.

_____________________________________

NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF THE PURCHASER, ANY AFFILIATE OF THE
PURCHASER, THE PARTNERSHIP, ANY AFFILIATE OF THE PARTNERSHIP, THE
DEPOSITARY, OR THE INFORMATION AGENT OR AUTHORIZE YOU OR ANY OTHER PERSON
TO GIVE ANY INFORMATION OR MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM
WITH RESPECT TO THE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE
MATERIAL ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED HEREIN.

-2-

Exhibit (a)(5)

- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, OCTOBER 2, 1995, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------

To Our Clients:

Enclosed for your consideration is an Offer to Purchase dated
October 2, 1995 (the "Offer to Purchase"), and the related Letter of
Transmittal (which together constitute the "Offer") relating to the offer
by Forum Group, Inc., an Indiana corporation (the "Purchaser"), to purchase
all of the outstanding preferred depositary units (the "Units")
representing preferred limited partners' interests in Forum Retirement
Partners, L.P., a Delaware limited partnership, at $2.50 per Unit, net to
the seller in cash, on the terms and subject to the conditions set forth in
the Offer.

This material is being forwarded to you as the beneficial owner of
Units held by us for your account but not registered in your name. A
tender of such Units can be made only by us as the holder of record and
only pursuant to your instructions. The enclosed Letter of Transmittal is
furnished to you for your information only and cannot be used by you to
tender Units held by us for your account.

We request instructions as to whether you wish to have us tender any
or all such Units held by us for your account, on the terms and subject to
the conditions of the Offer.

Your attention is invited to the following:

1. The tender price is $2.50 per Unit, net to you in cash.

2. The Offer is being made for any and all outstanding Units.

3. You will not be obligated to pay any brokerage fees or
commissions or, except as set forth in Instruction 6 of the
Letter of Transmittal, any transfer taxes on the purchase of
Units by the Purchaser pursuant to the Offer.

4. The Offer and withdrawal rights will expire at 12:00 Midnight,
New York City time, on Tuesday, October 31, 1995, unless
extended.

If you wish to have us tender any or all of your Units, please so
instruct us by completing, executing, and returning to us the instruction
form set forth on the reverse side of this page. If you authorize us to
tender your Units, all such Units will be tendered unless otherwise
indicated. Your instructions to us should be forwarded to us promptly to
permit us to submit a tender on your behalf prior to the expiration of the
Offer.

<PAGE>

Instructions with Respect to the Offer to Purchase for Cash
All Outstanding Preferred Depositary Units
Representing Preferred Limited Partners' Interests
in
FORUM RETIREMENT PARTNERS, L.P.
at
$2.50 Net Per Unit
by
FORUM GROUP, INC.

The undersigned acknowledge(s) receipt of your letter enclosing the
Offer to Purchase dated October 2, 1995 (the "Offer to Purchase"), and the
related Letter of Transmittal, relating to the offer by Forum Group, Inc.,
an Indiana corporation, to purchase any and all outstanding preferred
depositary units ("Units") representing preferred limited partners'
interests in Forum Retirement Partners, L.P., a Delaware limited
partnership.

This will instruct you to tender the number of Units indicated below
held by you for the account of the undersigned upon the terms and subject
to the conditions set forth in such Offer to Purchase and the related
Letter of Transmittal.

<TABLE>

<S> <C>

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

------------------------------------------------
Number of Units to be Tendered: Signature(s)

_____________________________ Units*
------------------------------------------------
*I (we) understand that if I (we) sign
these instructions without indicating a ------------------------------------------------
lesser number of Units in the space Please Print Name(s)
above, all Units held by you for my
(our) account will be tendered.

</TABLE>

-2-

<TABLE><CAPTION>
Exhibit (a)(6)

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION

NUMBER ON SUBSTITUTE FORM W-9

Guidelines for Determining the Proper Identification Number to Give the Payer. Social Security numbers have nine digits separated
by two hyphens: i.e., 000-00-000. Employer Identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000.
The table below will help determine the number to give the payer.

- ---------------------------------------------------------------- ----------------------------------------------------------
Give the SOCIAL SECURITY Give the EMPLOYER
For this type of account: For this type of account:
number of-- IDENTIFICATION number of--
- ---------------------------------------------------------------- ----------------------------------------------------------
<S> <C> <C> <C>
1. Individual The individual 6. Sole proprietorship The owner(3)

2. Two or more individuals The actual owner of the 7. A valid trust, estate, The legal entity (Do not
(joint account) account or, if combined or pension trust furnish the identifying
funds, any one of the number of the personal
individuals(1) representative or trustee
unless the legal entity
itself is not designated in
the account title.)(4)
3. Custodian account of a minor The minor(2) 8. Corporate The corporation
(Uniform Gift to Minors Act)

4. a. The usual The grantor-trustee(1) 9. Association, club, The organization
revocable savings religious, charitable,
trust (grantor is educational or other
also trustee) tax-exempt organization

b. So-called trust The actual owner(1)
account that is
not a legal or
valid trust under
state law

5. Sole proprietorship The owner(3) 10. Partnership The partnership

11. A broker or registered The broker or nominee
nominee

12. Account with the The public entity
Department of
Agriculture in the name
of a public entity (such
as a state or local
government, school
district, or prison)
that receives
agriculture program
payments
- ---------------------------------------------------------------- ----------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the name of the owner.
(4) List first and circle the name of the legal trust, estate, or pension trust.

Note: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed.

</TABLE>

<PAGE>

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9

Page 2
<S> <C>
Section references are to the Internal Revenue Code. Payments of interest generally not subject to backup
withholding include the following:
Obtaining a Number
- Payments of interest on obligations issued by;
If you don't have a taxpayer identification number or individuals.
you don't know your number, obtain Form SS-5,
Application for a Social Security Number Card, or Form Note: You may be subject to backup withholding if
SS-4, Application for Employer Identification Number, at this interest is $600 or more and is paid in the
the local office of the Social Security Administration course of the payer's trade or business and you have
or the Internal Revenue Service (the "IRS") and apply not provided your correct taxpayer identification
for a number. number to the payer.

Payees Exempt from Backup Withholding - Payments of tax-exempt interest (including exempt
interest dividends under section 852).
The following is a list of payees exempt from backup
withholding and for which no information reporting is - Payments described in section 6049(b)(5) to
required. For interest and dividends, all listed payees nonresident aliens.
are exempt except item (9). For broker transactions,
payees listed in (1) through (13) and a person - Payments on tax-free covenant bonds under section
registered under the Investment Advisers Act of 1940 who 1451.
regularly acts as a broker are exempt. Payments subject
to reporting under sections 6041 and 6041A are generally - Payments made by certain foreign organizations.
exempt from backup withholding only if made to payees
described in items (1) through (7), except that a - Mortgage interest paid by you.
corporation that provides medical and health care
services or bills and collects payments for such Payments that are not subject to information reporting
services is not exempt from backup withholding or are also not subject to backup withholding. For details
information reporting. Only payees described in items see sections 6041, 6041(A)(a), 6042, 6044, 6045, 6049,
(2) through (6) are exempt from backup withholding for 6050A and 6050N, and the regulations under such
barter exchange transactions, patronage dividends, and sections.
payments by certain fishing boat operators.
(1) A corporation. Privacy Act Notice
(2) An organization exempt from tax under section
501(a), or an individual retirement plan Section 6109 requires you to give your correct taxpayer
("IRA"), or a custodial account under identification number to persons who must file
403(b)(7). information returns with the IRS to report interest,
(3) The United States or any of its agencies or dividends, and certain other income paid to you,
instrumentalities. mortgage interest you paid, the acquisition or
(4) A State, the District of Columbia, a possession abandonment of secured property, cancellation of debt,
of the United States, or any of their political or contributions you made to an IRA. The IRS uses the
subdivisions or instrumentalities. numbers for identification purposes and to help verify
(5) A foreign government or any of its political the accuracy of your tax return. You must provide your
subdivisions, agencies or instrumentalities. taxpayer identification number whether or not you are
(6) An international organization or any of its qualified to file a tax return. Payers must generally
agencies or instrumentalities. withhold 31% of taxable interest, dividend, and certain
(7) A foreign central bank of issue. other payments to a payee who does not furnish a
(8) A dealer in securities or commodities required taxpayer identification number to a payer. Certain
to register in the United States or a penalties may also apply.
possession of the United States.
(9) A futures commission merchant registered with Penalties
the Commodity Futures Trading Commission.
(10) A real estate investment trust. (1) Penalty for Failure to Furnish Taxpayer
(11) An entity registered at all times during the Identification Number. If you fail to furnish your
tax year under the Investment Company Act of taxpayer identification number to a payer, you are
1940. subject to a penalty of $50 for each such failure unless
(12) A common trust fund operated by a bank under your failure is due to reasonable cause and not to
section 584(a). willful neglect.
(13) A financial institution.
(14) A middleman known in the investment community (2) Civil Penalty for False Information With Respect to
as a nominee or listed in the most recent Withholding. If you make a false statement with no
publication of the American Society of reasonable basis that results in no backup withholding,
Corporate Secretaries, Inc., Nominee List. you are subject to a $500 penalty.
(15) A trust exempt from tax under section 664 or
described in section 4947. (3) Criminal Penalty for Falsifying Information.
Falsifying certifications or affirmations may subject
Payments of dividends and patronage dividends generally you to criminal penalties including fines and/or
not subject to backup withholding also include the imprisonment.
following:
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT
- - Payments to nonresident aliens subject to withholding OR THE INTERNAL REVENUE SERVICE
under section 1441.

- - Payments to partnerships not engaged in a trade or
business in the United States and that have at least
one nonresident partner.

- - Payments of patronage dividends not paid in money.

- - Payments made by certain foreign organizations.

</TABLE>

Exhibit (a)(7)

FOR IMMEDIATE RELEASE

For Information Contact:
Dennis Lehman, CFO
(703) 277-7036

FORUM GROUP ANNOUNCES $2.50 TENDER OFFER FOR FORUM
RETIREMENT PARTNERS UNITS

Fairfax, Virginia, September 25, 1995 - Forum Group, Inc. (NASDAQ
Small Cap: FOUR) announced today that on Friday, September 22, 1995, it
delivered a letter to the members of the Board of Directors of Forum
Retirement, Inc., the general partner of Forum Retirement Partners, L.P.
(AMEX: FRL), advising them of FGI's decision to commence an offer to
purchase the FRP limited partners' interests not owned by FGI at $2.50 per
unit. The body of the letter was as follows:

<PAGE>

We are, of course, available to discuss any aspect of
our tender offer with you at your convenience."

Forum Group presently owns approximately 61.7% of the total number of
units outstanding.

The tender offer will be made pursuant to an offer to purchase and
related documentation, which are expected to be mailed to unitholders
shortly.

# # #

Exhibit (a)(8)

FORUM GROUP, INC.
11320 Random Hills Road, Suite 400
Fairfax, Virginia 22030

October 2, 1995

Dear Forum Retirement Partners, L.P. Unitholder:

We are pleased to enclose for your consideration our Offer to Purchase
for cash at $2.50 per Unit any and all of the outstanding limited
partnership interests in Forum Retirement Partners, L.P. (the
"Partnership"). The Offer will expire at 12:00 midnight, New York City
time, on Tuesday, October 31, 1995, unless extended.

As discussed in the enclosed Offer to Purchase (see "Special Factors --
Market Prices for Units"), the $2.50 price represents a substantial premium
over recent trading prices of the Units. In addition, Unitholders who
tender their Units pursuant to our Offer will not be obligated to pay
brokerage fees or commissions. You should be aware that the purchase of
Units pursuant to our Offer may result in the delisting of the Units from
trading on the American Stock Exchange depending on the number of
Unitholders and aggregate market value of Units not owned by the Purchaser
following the Offer and may have other effects which could adversely affect
the liquidity or prices realizable in sales of Units following the
completion of the Offer. See "Certain Effects of the Offer" in the
enclosed Offer to Purchase.

In addition, the Purchaser intends to seek to effect certain changes
in the Partnership's business if the Purchaser substantially increases its
equity ownership in the Partnership, whether pursuant to the Offer or
otherwise. See "Special Factors" with respect to these and other matters
important to a decision whether to tender Units pursuant to the Offer.

We urge you to read the enclosed Offer to Purchase and related Letter
of Transmittal carefully. These materials contain important information
concerning our Offer, including the conditions thereto, the possible
effects thereof, and our plans and proposals relating to the Partnership.
For answers to any questions that you might have regarding the enclosed
materials or our Offer, or for assistance with the procedures for accepting
the Offer and tendering your Units, please contact our information agent,
MacKenzie Partners, Inc., at 1-800-322-2885.

Very truly yours,

Mark L. Pacala
Chairman of the Board and
Chief Executive Officer

Exhibit (g)(1)

POWER OF ATTORNEY

Forum Group, Inc. (the "Company") hereby constitutes and appoints
Kristi D. Bohling, Troy B. Lewis and Robert A. Profusek, and each of them,
as the Company's true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, to sign on the Company's behalf
any and all Tender Offer Statements on Schedule 14D-1 and Rule 13E-3
Transaction Statements on Schedule 13E-3, and any or all amendments
thereto, relating to the preferred depositary units representing preferred
limited partners' interests in Forum Retirement Partners, L.P., and to file
the same, with all exhibits thereto, and all other documents required in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact or agents and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, hereby ratifying and
confirming all that said attorneys-in-fact or agents, or any of them or
their substitutes, may lawfully do or cause to be done by virtue hereof.

Dated: October 2, 1995 FORUM GROUP, INC.

By: Dennis L. Lehman
------------------------------------
Dennis L. Lehman,
Senior Vice President and
Chief Financial Officer

<PAGE>

POWER OF ATTORNEY

Forum A/H, Inc. (the "Company") hereby constitutes and appoints
Kristi D. Bohling, Troy B. Lewis and Robert A. Profusek, and each
of them, as the Company's true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, to
sign on the Company's behalf any and all Tender Offer Statements on
Schedule 14D-1 and Rule 13E-3 Transaction Statements on Schedule 13E-3,
and any or all amendments thereto, relating to the preferred depositary
units representing preferred limited partners' interests in Forum
Retirement Partners, L.P., and to file the same, with all exhibits
thereto, and all other documents required in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
or agents and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and
about the premises, hereby ratifying and confirming all that said
attorneys-in-fact or agents, or any of them or their substitutes, may
lawfully do or cause to be done by virtue hereof.

Dated: October 2, 1995 FORUM A/H, INC.

By: Dennis L. Lehman
------------------------------------
Dennis L. Lehman,
Vice President