8-K

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                       Pursuant to Section 13 or 15(d) of

                       THE SECURITIES EXCHANGE ACT OF 1934


       Date of Report (Date of earliest event reported): January 23, 2002



                         Commission File Number: 0-18942

                           ILM II SENIOR LIVING, INC.
                           --------------------------
             (Exact name of registrant as specified in its charter)


           Virginia                                              06-1293758
 -----------------------------                            ----------------------
    (State of organization)                                   (I.R.S. Employer
                                                             Identification No.)


1750 Tysons Boulevard, Suite 1200, Tysons Corner, Virginia            22102
- ----------------------------------------------------------       --------------
(Address of principal executive office)                             (Zip Code)


                (888) 257-3550
- ----------------------------------------------------
(Registrant's telephone number, including area code)










                                  (Page 1 of 5)
                         Exhibit Index Appears on Page 5




ITEM 5.  OTHER EVENTS

      On Jan. 23, 2002, ILM II Senior Living, Inc. ("ILM II") and its
subsidiary, ILM II Holding, Inc., a Virginia corporation (together with ILM II,
the "Company") entered into a purchase and sale agreement with Five Star Quality
Care, Inc., a publicly traded Maryland corporation ("FVE"), pursuant to which
the Company agreed to sell, and FVE agreed to purchase, all of the Company's
right, title and interest in and to its senior and assisted living facilities
and certain other related assets (the "FVE Agreement"). In consideration for the
sale of these facilities, FVE agreed, subject to certain conditions and
apportionments, to pay the Company a purchase price of $45.5 million,
approximately $5 million of which has been paid into escrow as a refundable
deposit.

      Each of the parties' respective obligations under the FVE Agreement is
subject to customary closing conditions. FVE's obligation to close the
transaction is subject to a due diligence inspection period ending February 22,
2002, providing FVE with the right to notify the Company about certain property
defects requiring more than $250,000 to cure. Upon such notification, the
Company may elect whether to refund a portion of the escrow deposit or agree to
reduce the purchase price by the amount such defect exceeds $250,000. If the
Company elects to terminate the FVE Agreement, FVE may rescind such notice of
material defect and continue with the transaction on the previously agreed
terms. Further, after the inspection period has run, if either party should
breach the FVE Agreement, the non-breaching party shall be entitled to keep the
aforementioned deposit as liquidated damages, and in the case of the Company's
breach in limited circumstances, FVE may seek specific performance or other
remedies as liquidated damages.

      As previously reported in a current report on Form 8-K dated November 16,
2001, the Company entered into a purchase and sale agreement with
BRE/Independent Living, LLC, a Delaware limited liability company for the sale
of the Company's senior and assisted living facilities and certain related
assets (the "BRE Agreement"). On January 15, 2002, the Company received a letter
from BRE, indicating its intention not to consummate the BRE transaction at the
agreed upon contract price contained in the BRE Agreement. The Company
determined that such refusal to consummate the BRE Agreement in accordance with
its terms constituted a breach by BRE of the BRE Agreement. Accordingly the
Company terminated the BRE Agreement.

      Upon consummation of the transactions contemplated by the FVE Agreement or
otherwise upon sale of the senior and assisted living facilities to a third
party, the Company intends to liquidate and distribute its assets in accordance
with the Virginia Stock Corporation Act, which provides for the distribution of
the Company's assets first to the Company's creditors for purposes of
discharging all of the Company's liabilities, and then, to the extent assets are
remaining, to the Company's shareholders in accordance with their respective
rights and interests.

      There can be no assurance as to whether the transactions contemplated by
the FVE Agreement will be consummated or, if consummated, as to the exact timing
thereof. Similarly, there can be no assurance as to the timing of a liquidation
and distribution of the Company's assets or the amount of assets that will be
distributed to the Company's shareholders, if any.

      This report contains "forward-looking statements" based on our current
expectations and projections about future events. These forward-looking
statements are subject to a number of risks and uncertainties which could cause
our actual results to differ materially from historical results or those
anticipated and certain of which are beyond our control. We undertake no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.


                                  (Page 2 of 5)




ITEM 7.  FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.

      (a)   Not Applicable

      (b)   Not Applicable

      (c)   The following Exhibits are filed as part of this Current Report on
Form 8-K:

            99.1   Press Release of ILM II Senior  Living,  Inc. dated January
                   25, 2002.

            99.2   Sale Purchase Agreement by and among ILM II Senior Living,
                   Inc., ILM II Holding, Inc. and Five Star Quality Care, Inc.




                                  (Page 3 of 5)





                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


                                    ILM II SENIOR LIVING, INC.


                                    By:   /s/ J. William Sharman, Jr.
                                          -----------------------------------
                                          J. William Sharman, Jr.
                                          Chairman of the Board of Directors,
                                          President and Chief Executive
                                          Officer


Dated:  January 31, 2002









                                  (Page 4 of 5)






                                 EXHIBIT INDEX

                                                                   Page No.

99.1  Press Release of ILM II Senior Living, Inc.                     6
      dated January 25, 2002.

99.2  Sale Purchase Agreement by and among ILM II Senior              8
      Living, Inc., ILM II Holding, Inc. and Five Star Quality
      Care, Inc.





                                  (Page 5 of 5)

EX-99

                                                                    EXHIBIT 99.1

                           ILM II SENIOR LIVING, INC.

                                       AND

                              ILM II HOLDING, INC.

                                    AGREE TO

                 SELL SENIOR LIVING FACILITIES FOR $45.5 MILLION

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

FOR IMMEDIATE RELEASE:

TYSONS CORNER, VA.--Jan. 25, 2002--ILM II Senior Living, Inc. announced today,
that on January 23, 2002, ILM II and its wholly owned subsidiary, ILM II
Holding, Inc., a Virginia corporation, entered into a purchase and sale
agreement with Five Star Quality Care, Inc., a publicly traded Maryland
corporation (AMEX: FVE), pursuant to which ILM II agreed to sell, and FVE agreed
to purchase, all of ILM II's right, title and interest in and to its senior and
assisted living facilities and certain other related assets. In consideration
for the sale of these facilities, FVE agreed, subject to certain conditions and
apportionments, to pay ILM II a purchase price of $45.5 million, approximately
$5 million of which has been paid into escrow as a refundable deposit.

ILM II further announced that each of the parties' respective obligations under
such agreement is subject to customary closing conditions. FVE's obligation to
close the transaction is subject to a due diligence inspection period ending
February 22, 2002, providing FVE with the right to notify ILM II about certain
property defects requiring more than $250,000 to cure. Upon such notification,
ILM II may elect whether to refund a portion of the escrow deposit or agree to
reduce the purchase price by the amount such defect exceeds $250,000. If ILM II
elects to terminate the agreement, FVE may rescind such notice of material
defect and continue with the transaction on the previously agreed terms.
Further, after the inspection period has run, if either party should breach the
agreement, the non-breaching party shall be entitled to keep the aforementioned
deposit as liquidated damages, and in the case of ILM II's breach in limited
circumstances, FVE may seek specific performance or other remedies as liquidated
damages.

As previously reported, on November 16, 2001 ILM II entered into a purchase and
sale agreement with BRE/Independent Living, LLC, a Delaware limited liability
company for the sale of ILM II's senior and assisted living facilities and
certain related assets. On January 15, 2002, ILM II received a letter from BRE,
indicating its intention not to consummate the BRE transaction at the agreed
upon contract price. ILM II determined that such refusal to consummate the BRE
agreement in accordance with its terms constituted a breach by BRE of such
agreement. Accordingly ILM II terminated the BRE agreement.

Upon consummation of the transactions contemplated by the FVE agreement or
otherwise upon sale of the senior and assisted living facilities to a third
party, ILM II intends to liquidate and distribute its assets in accordance with
the Virginia Stock Corporation Act, which provides for the distribution of ILM
II's assets first to ILM II's creditors for purposes of discharging all of ILM
II's liabilities, and then, to the extent assets are remaining, to ILM II's
shareholders in accordance with their respective rights and interests.





There can be no assurance as to whether the transactions contemplated by the FVE
agreement will be consummated or, if consummated, as to the exact timing
thereof. Similarly, there can be no assurance as to the timing of a liquidation
and distribution of ILM II's assets or the amount of assets that will be
distributed to ILM II's shareholders, if any.

If you have any questions regarding this press release, please call ILM II, toll
free at 1-888-257-3550.

THIS PRESS RELEASE CONTAINS "FORWARD-LOOKING STATEMENTS" BASED ON OUR CURRENT
EXPECTATIONS AND PROJECTIONS ABOUT FUTURE EVENTS. THESE FORWARD-LOOKING
STATEMENTS ARE SUBJECT TO A NUMBER OF RISKS AND UNCERTAINTIES WHICH COULD CAUSE
OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM HISTORICAL RESULTS OR THOSE
ANTICIPATED AND CERTAIN OF WHICH ARE BEYOND OUR CONTROL. WE UNDERTAKE NO
OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS, WHETHER
AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.