EMERITUS CORP\WA\
EXHIBIT 10.46.8
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>exhibit10468.txt
<DESCRIPTION>EXHIBIT 10.46.8
<TEXT>


                                 LOAN AGREEMENT
                                      AMONG
                        HELLER HEALTHCARE FINANCE, INC.,
                             A DELAWARE CORPORATION
                                   ("LENDER")
                                       AND
ESC-PUYALLUP, LLC, A WASHINGTON LIMITED LIABILITY COMPANY, ESC-PORT ST. RICHIE,
LLC, A WASHINGTON LIMITED LIABILITY COMPANY, AND ESC-BOZEMAN, LLC, A WASHINGTON
                           LIMITED LIABILITY COMPANY,
                           (COLLECTIVELY, "BORROWER")
                          LOAN IN THE PRINCIPAL AMOUNT
                                 OF $30,550,000
                            SENIOR HOUSING FACILITIES


<PAGE>

<PAGE>





                                TABLE OF CONTENTS

RECITALS     2
ARTICLE  I.  The  Loan     2
ARTICLE  II.  Security     5
ARTICLE  III.  Conditions  Precedent     6
ARTICLE  IV.  Representations  and  Warranties     8
ARTICLE  V.  Affirmative  Covenants     13
ARTICLE  VI.  Negative  Covenants     16
ARTICLE  VII. Events of Default; Acceleration of Indebtedness; Remedies     17
ARTICLE  VIII.  Miscellaneous     18

                         LIST OF EXHIBITS AND SCHEDULES
Exhibit  A-1     Property  Description
Exhibit  A-2     Property  Description
Exhibit  A-3     Property  Description
Exhibit  B     Litigation
Exhibit  C     Security  Deposits
Exhibit  D     Release  Prices

Schedule  I     Index  of  Defined  Terms

<PAGE>

<PAGE>

                                      -24-
     LOAN  NO.  21-240

                                 LOAN AGREEMENT

     This  LOAN  AGREEMENT  (this "AGREEMENT") is made this 8th day of February,
2002  by  and  between  HELLER  HEALTHCARE FINANCE, INC., a Delaware corporation
("LENDER"),  ESC-PUYALLUP,  LLC  ("PUYALLUP"),  ESC-PORT  ST. RICHIE, LLC ("PORT
RICHIE"),  and  ESC-BOZEMAN,  LLC,  each  a Washington limited liability company
("BOZEMAN").  Bozeman, Port Richie and Puyallup are sometimes referred to herein
individually  and  collectively  as  "BORROWER".
                                    RECITALS
A.          Lender  has  agreed  to  make a loan (the "LOAN") to Borrower in the
aggregate  principal  amount  of  Thirty Million Five Hundred Fifty Thousand and
No/100  Dollars  ($30,550,000.00)  subject to the terms and conditions contained
herein.  The  Loan  is  evidenced by that certain Promissory Note A of even date
herewith  in  the  original  principal  amount of Nineteen Million Eight Hundred
Fifty-Seven  Thousand  Five  Hundred  and  No/100 Dollars ($19,857,500.00) (this
promissory  note  and  all  amendments  thereto  and  substitutions therefor are
hereinafter  referred  to  herein  collectively  as  "NOTE  A") and that certain
Subordinated  Promissory  Note B of even date herewith in the original principal
amount  of  Ten  Million Six Hundred Ninety-Two Thousand Five Hundred and No/100
Dollars  ($10,692,500.00)  (this  promissory note and all amendments thereto and
substitutions  therefor are hereinafter referred to herein collectively as "NOTE
B").  Note  A  and  Note  B are sometimes collectively referred to herein as the
"NOTES."  The  terms  and provisions of the Notes are hereby incorporated herein
by  reference  in  this  Agreement.
B.          On  the  Closing  Date,  Port  Richie  will be the owner of the real
property more particularly described on Exhibit A-1 attached hereto and commonly
                                        -----------
     known  as  "LA  CASA  GRANDE" (the "LA CASA PROPERTY"), Bozeman will be the
owner  of  the real property more particularly described on Exhibit A-2 attached
                                                            -----------
hereto  and  commonly  known  as  "SPRING  MEADOWS" (the "SPRING PROPERTY"), and
Puyallup  will  be the owner of the real property more particularly described on
Exhibit  A-3  attached  hereto  and commonly known as "COURTYARD AT THE WILLOWS"
 -----------
(the  "COURTYARD  PROPERTY",  and collectively with the La Casa Property and the
 --
Spring Property, the "PROPERTIES"; and each individually, a "PROPERTY"), and the
 -
assisted living facility and/or other improvements located thereon (collectively
called  the  "IMPROVEMENTS").  The Properties and the Improvements are sometimes
collectively  called  the  "PROJECT".  On  the Closing Date, (a) Port Richie, as
landlord, shall enter into a Lease Agreement with Emeritus Properties V, Inc., a
Washington  corporation,  as  tenant,  with respect to the La Casa Property; (b)
Bozeman,  as  landlord,  shall  enter  into  a  Lease  Agreement  with  Emeritus
Properties  II,  Inc.,  a Washington corporation, as tenant, with respect to the
Spring Meadows Property; and (c) Puyallup, as landlord, shall enter into a Lease
Agreement  with  Emeritus  Properties  III,  Inc.,  a Washington corporation, as
tenant,  with  respect  to  Courtyard  Property.  The  aforementioned leases are
collectively  referred to herein as the "LICENSEE LEASES", and the tenants under
each  Licensee  Lease  are  referred  to  as  a  "LICENSEE" and, collectively as
"LICENSEES".
C.          Borrower's  obligations under the Loan Documents will be secured by,
among  other  things,  (i)  the  Environmental  Indemnity, (ii) a first priority
mortgage  or  deed  of  trust,  as  applicable,  each  of  even  date  herewith
(individually,  a  "MORTGAGE",  and  collectively, the "MORTGAGES"), encumbering
each  Property  and  the  Improvements  located  thereon, (iii) an assignment of
leases  and  rents executed by each Borrower and by each Licensee (individually,
an  "ASSIGNMENT  OF  LEASES",  collectively,  the  "ASSIGNMENTS  OF  LEASES")
encumbering  each  Property  and  the Improvements located thereon, and (iv) the
Guaranty.  This  Agreement,  the  Notes,  the  Mortgages,  the  Environmental
Indemnity,  the Guaranty and any other documents evidencing or securing the Loan
or  executed  in  connection  therewith  and  any  modifications,  renewals  and
extensions  thereof  are  collectively  referred  to  as  the  "LOAN DOCUMENTS".
D.          The  proceeds  of the Loan will be used for, among other things, the
purpose  of  refinancing  the  Project.
E.          An  index  of  defined  terms  appears  on  the attached Schedule I.
                                                                     ----------
     NOW, THEREFORE, in consideration of the foregoing and the mutual conditions
and  agreements  contained  herein,  the  parties  agree  as  follows:
ARTICLE  I.
THE  LOAN
---------
1.1.     FUNDING.
         -------
1.1.1.     FUNDING.  On the Closing Date, Lender shall disburse to Borrower from
           -------
     the  proceeds  of  the  Loan  the  sum of Thirty Million Five Hundred Fifty
Thousand  and No/100 Dollars ($30,550,000.00).  "CLOSING DATE" means the date of
disbursement  of  the  Loan.
1.2.     LOAN  TERM.
         ----------
1.2.1.     MATURITY  DATE.  The  Loan  shall  mature  on  February 28, 2004 (the
           --------------
"MATURITY  DATE")  or any earlier date on which the Loan shall be required to be
paid  in  full,  whether  by  acceleration  or  otherwise.
1.2.2.     EXTENSION  OPTION.  Borrower may extend the Maturity Date to February
           -----------------
28,  2005  provided  that:  (a)  Borrower  has  given Lender written notice (the
"EXTENSION  NOTICE")  of  such  extension not less than 45 days nor more than 90
days  prior  to the Maturity Date; (b) Borrower has paid or caused to be paid to
Lender  concurrently  with  the  giving of the Extension Notice a non-refundable
extension  fee  equal  to $305,500; (c) no default shall have occurred under the
terms  of  any  of  the  Loan  Documents; (d) the Project Yield is not less than
14.50%  for  the six (6) months immediately preceding the Maturity Date; (e) the
Debt  Coverage  Ratio  for the six (6) months immediately preceding the Maturity
Date  exceeds  1.45,  and  (f) the maturity date of the Deutsche Bank Debt shall
have  been  extended  to  a  date  which is at least thirty (30) days beyond the
Maturity  Date, as extended by this Section or shall have been refinanced with a
loan  having  a  maturity  date  which  is  at least thirty (30) days beyond the
Maturity  Date,  as  extended  by  this  Section.
     "DEBT  COVERAGE RATIO" means the ratio of (i) Net Operating Income from the
Project  for  a  particular period, to (ii) payments of interest due on the Loan
for  the  same  period.
"PROJECT  YIELD"  for  any  period  means  the quotient of (x) the Net Operating
Income  from  the Project (calculated using actual occupancy of the Project), as
determined  by  Lender's audit (or otherwise reasonably estimated by Lender), at
Borrower's  expense,  divided  by  (y)  the  then  current outstanding principal
balance  of  the  Loan  plus  all  accrued  but  unpaid  interest  thereon.
"NET  OPERATING  INCOME"  means  the  Effective  Rental  Income  (as  reasonably
determined  by  Lender  and  excluding  non-recurring  and  non-Property related
income)  less Expenses.  Calculation of "EFFECTIVE RENTAL INCOME" shall be based
         ----
on  the  lesser  of:
(a)     the  rent  rolls  from the most recent three months annualized (adjusted
for  concessions);  or
(b)     an  assumed  93%  occupancy  rate  for  the  same  period  annualized.
     Effective  Rental  Income shall not include receipts from any other sources
including,  but  not  limited to, late fees and interest income.  Calculation of
"EXPENSES"  shall  mean  (i)  for purposes of this Section, the actual customary
operating  expenses  of  the  Property,  on  a stabilized accrual basis, for the
previous  twelve  (12) month period as reasonably adjusted by Lender, including,
but  not  limited  to,  recurring expenses, real estate taxes and assessments, a
management  fee  (whether or not paid) equal to the greater of five percent (5%)
of  effective  gross  revenue  or  the  amount  actually  paid  by  Borrower,  a
replacement  reserve  in  an  amount  equal  to Three Hundred and No/100 Dollars
($300.00)  per  unit;  or (ii) for purposes of Section 5.9, the actual customary
operating  expenses  of  the  Property,  on  a stabilized accrual basis, for the
previous  twelve  (12)  month  period,  including, but not limited to, recurring
expenses,  real  estate  taxes and assessments, a management fee (whether or not
paid)  equal  to  the greater of five percent (5%) of effective gross revenue or
the  amount  actually paid by Borrower, a replacement reserve in an amount equal
to  Three  Hundred  and  No/100  Dollars  ($300.00)  per  unit.
1.3.     INTEREST  RATE.  Borrower  shall  pay  interest  on  the  outstanding
         --------------
principal balance of the Loan at a rate equal to the greater of (i) a fixed rate
     per  annum equal to seven percent (7.0%) and (ii) a floating rate per annum
equal  to  the  Base Rate plus percent (4.0%) (the aggregate rate referred to as
the "INTEREST RATE").  "BASE RATE" shall mean the rate published each day in The
                                                                             ---
Wall Street Journal for notes maturing three (3) months after issuance under the
-------------------
caption  "Money  Rates,  London  Interbank Offered Rates (LIBOR)".  The Interest
Rate  for  each calendar month shall be fixed based upon the Base Rate published
prior  to and in effect on the first (1st) business day of such month; provided,
however,  the Interest Rate from and including the Closing Date through February
28,  2002  shall be fixed based upon the Base Rate in effect on the business day
immediately preceding the Closing Date.  Interest shall be calculated based on a
360  day  year  and  charged  for  the  actual  number  of  days  elapsed.
1.4.     PAYMENTS.
         --------
1.4.1.     PAYMENTS  AT  INTEREST  RATE.  Borrower  shall make interest payments
           ----------------------------
monthly in arrears on the first (1st) day of each month commencing March 1, 2002
     computed  on  the outstanding principal balance of the Loan at the Interest
Rate.
1.4.2.     PRINCIPAL  PAYMENTS.  Commencing  on  March  1,  2002  and continuing
           -------------------
through  February  28, 2003, on the first (1st) day of each month Borrower shall
make a monthly principal amortization payment of Thirty-Nine Thousand and No/100
Dollars  ($39,000.00).  Commencing  on  March  1,  2003  and  continuing through
February  28,  2004,  on  the  first (1st) day of each month Borrower shall make
monthly  principal  payments  in  the  amount  of  Forty-Two Thousand and No/100
Dollars  ($42,000.00).  If  the term of the Loan is extended pursuant to Section
1.2.2 above, then commencing on March 1, 2004 and continuing until the Repayment
Date, on the first (1st) day of each month Borrower shall make monthly principal
payments  in  the amount of Forty-Five Thousand and No/100 Dollars ($45,000.00).
     "REPAYMENT  DATE" means the date upon which the entire principal balance of
the  Loan  and  all  interest  thereon  and  other sums due pursuant to the Loan
Documents,  including, without limitation, the Exit Fee, have been paid in full.
1.5.     SOURCES  AND  USES.  The sources and uses of funds for the contemplated
         ------------------
transaction  are  as  follows:
<TABLE>
<CAPTION>




SOURCES                                    USES
------------------------  --------------------------------------
<S>                       <C>
Loan Amount  $30,550,000  Payoff of Deutsche Bank:  $30,000,000
                          Reimbursement to Borrower for
                          Lender Fee:  $457,500
                          Closing Costs:  $92,500

Total:  $30,550,000. . .  $                           30,550,000
</TABLE>



Borrower  shall  deliver  such  information  and  documentation  as Lender shall
--------------------------------------------------------------------------------
request to verify that the sources and uses are as indicated above.  A reduction
--------------------------------------------------------------------------------
in  the amounts necessary for any of the uses shall result in an equal reduction
--------------------------------------------------------------------------------
in  the  amount  of  the  Loan.
-------------------------------
1.6.     INTENTIONALLY  OMITTED.
-------------------------------
1.7.     PREPAYMENTS OF LOAN.  Subject to Section 2.2 below, Borrower may prepay
         -------------------
the  outstanding  principal  balance  of  the Loan in full (but not in part) any
time;  provided  Borrower  gives Lender at least thirty (30) days' prior written
       --------
notice  and  pays  the  Exit  Fee,  if  any,  then  due  Lender.
1.8.     EXIT FEE.  As additional consideration for entering into this Agreement
         --------
and  making the Loan, Borrower shall, on the date payment in full of the Loan is
made,  pay  to  Lender  the  amount  (the  "EXIT  FEE")  set forth below for the
respective  period  in  which  payment  in  full  of the Loan occurs (whether at
maturity,  prepayment,  acceleration  or  otherwise).
<TABLE>
<CAPTION>




PERIOD IN WHICH PRINCIPAL BALANCE
OF LOAN BEING REPAID OCCURS        EXIT FEE
---------------------------------  ---------
<S>                                <C>
On or prior to February 28, 2003.  $       0

March 1, 2003 and thereafter. . .  $ 152,750
</TABLE>




ARTICLE  II.
SECURITY
--------
2.1.     COLLATERAL.  The  Loan and all other indebtedness and obligations under
         ----------
the  Loan  Documents  shall  be  secured  by  the  following  (collectively, the
"COLLATERAL"):  (a)  the  Mortgages,  (b) the Assignments of Leases, and (c) any
other  collateral  or security described in this Agreement or required by Lender
in  connection  with  the  Loan.
2.2.     RELEASE  OF  COLLATERAL.  Lender shall release the lien of its Mortgage
         -----------------------
and  Assignment of Leases with respect to a Property and such Property shall not
be  included  in  the Project for any period thereafter for purposes of the Loan
Documents,  provided  that  (a)  Borrower  pays  to Lender the lesser of (i) the
applicable  Release  Price with respect to such Property, or (ii) the sum of (A)
the outstanding principal balance of the Loan, plus (B) the applicable Exit Fee;
(b)  Borrower  pays,  or reimburses Lender, for all reasonable costs incurred in
connection  with the release of any Property; (c) no default exists under any of
the terms of the Loan Documents; (d) the remaining Property or Properties in the
Project  shall  have a Debt Coverage Ratio for the prior six (6) month period of
greater  than  or equal to 1.50; (e) the remaining Property or Properties in the
Project shall have a Project Yield for the prior six (6) month period of greater
than or equal to 15%; and (f) the Spring Property will not be the only remaining
Property in the Project after such release.  Upon satisfaction of all conditions
of  this  Section  2.2.  for  release  of  a  Property, the Borrower owning such
          -------------
Property  shall  be  released from all liability under the Loan Documents except
such  liabilities  which would survive, in accordance with the terms of the Loan
Documents,  the  repayment  of  the  Loan  in  full.
     The  "RELEASE  PRICE"  of  each Property shall be as set forth on Exhibit D
                                                                       ---------
attached  hereto.
ARTICLE  III.
CONDITIONS  PRECEDENT
---------------------
     Lender's  obligation to disburse the Loan is subject to satisfaction of all
of  the  following  conditions:
3.1.     LOAN  DOCUMENTS.  Lender  shall  have  received  the  following  Loan
         ---------------
Documents,  all  in  form  and  substance  satisfactory  to  Lender:
(a)     this  Agreement;
(b)     Note  A;
(c)     Note  B;
(d)     the  Mortgages;
(e)     the  Assignments  of  Leases;
(f)     such Uniform Commercial Code financing statements as Lender may require;
(g)     a  Guaranty  executed  by Emeritus Corporation, a Washington corporation
(the  "GUARANTOR"),  in  favor  of  Lender  (the  "GUARANTY").
(h)     a  hazardous  materials indemnity agreement ("ENVIRONMENTAL INDEMNITY"),
executed  by  Borrower  and  Guarantor;  and
(i)     an  attornment and subordination agreement with respect to each Licensee
Lease  (collectively,  the  "SNDAS");  and
(j)     an  assignment  of  management  contract,  subordination and recognition
agreement,  including  a  waiver  of  property  management  and  broker's liens,
executed  by each Borrower and the Manager (as hereinafter defined), relating to
the  Management  Contract  (as  hereinafter  defined)  for  each  Property.
3.2.     INTENTIONALLY  OMITTED.
         ----------------------
3.3.     INTENTIONALLY  OMITTED.
         ----------------------
3.4.     TITLE POLICY AND ENDORSEMENTS.  Lender shall have received a commitment
         -----------------------------
for  title  insurance  in  an  amount  and  issued  by a title insurance company
satisfactory  to  Lender.  On  the  Closing  Date,  Lender shall receive a title
insurance  policy  for  each  Property  (collectively,  the  "TITLE  POLICY"),
acceptable to Lender, insuring marketability of title and insuring that the lien
of  each  Mortgage  is  a  valid  first  lien on the applicable Property and the
Improvements  located  thereon,  subject only to exceptions to title approved by
Lender.  The  Title  Policy  shall also contain any reinsurance and endorsements
required  by  Lender,  to  the  extent available in the applicable jurisdiction,
including  without  limitation  creditors'  rights,  zoning 3.1, survey, access,
variable  rate,  usury,  last  dollar,  first  loss,  and  extended  coverage
endorsements  (Comprehensive  Form  1).
3.5.     SURVEY.  Lender  shall  have  received  and  approved  a survey of each
         ------
Property  and  the Improvements thereon, dated no more than forty-five (45) days
prior  to  the Closing Date, prepared by registered land surveyors in accordance
with  the  1999  American Land Title Association/ American Congress on Surveying
and  Mapping  Standards  and certified in favor of Lender and the title insurer.
The  surveyors  shall certify that no Property is located in a flood hazard area
as  identified  by the Secretary of Housing and Urban Development (or if it does
state that any Property is in a flood hazard area, Borrower shall maintain flood
insurance  with  respect  to  such  Property in amounts reasonably acceptable to
Lender  and otherwise in compliance with the Loan Documents).  The surveys shall
be  sufficient for the title insurer to remove the general survey exception from
the  Title  Policy.
3.6.     ENVIRONMENTAL  REPORT.  Lender  shall  have  received  a  Phase  I
         ---------------------
Environmental audit of the Project.  The audit shall (i) be addressed to Lender;
         --
(ii)  state  that  Lender may rely thereon; and (iii) be acceptable to Lender in
its  sole  discretion.
3.7.     LEASES.  All  leases,  licenses and other agreements with regard to the
         ------
occupancy  of  each  of  the  Properties,  including  patient  and resident care
agreements  and  service  agreements  which  include  an  occupancy  agreement
("LEASES")  shall  be  in  form  and  substance reasonably acceptable to Lender;
provided  Borrower  need  not  seek  Lender's  approval  for  any  new Qualified
Non-Residential  Lease  entered  into  hereafter.  Borrower  shall  submit  for
Lender's  approval  a copy of the form of residential Lease Borrower proposes to
utilize  at  the  Project,  and  all  residential  Leases entered into after the
Closing  Date  shall  be on forms reasonably approved by Lender without material
modification.  Lender must approve all non-residential Leases of any part of the
Project;  provided,  however,  Lender's  approval shall not be required for (but
Borrower  shall  provide  Lender  with  a  copy  of)  the  execution, amendment,
surrender  or termination of any Lease of non-residential space with an occupant
thereof  which  provides  for market rentals and otherwise contains market terms
and  provisions, so long as such Lease is not entered into with any Guarantor or
any  of  its or Borrower's Affiliates, does not have a term (including extension
options in favor of lessee) in excess of two (2) years and will not (in Lender's
reasonable  estimation)  account  for  Twenty-Five  Thousand  and No/100 Dollars
($25,000.00)  or  more  of  gross revenue from such Property in any one (1) year
period  (a  "QUALIFIED  NON-RESIDENTIAL  LEASE").  On the Closing Date, Borrower
shall deliver to Lender a rent roll showing all existing Leases.  On the Closing
Date,  all  existing Leases shall be in full force and effect and Borrower shall
submit  a  revised and recertified rent roll for each of the Properties.  If any
non-residential  leases,  other  than Qualified Non-Residential Leases, exist or
are  hereafter  entered into with respect to the Project, each tenant thereunder
shall  execute  and deliver to Lender prior to the Closing or prior to execution
thereof  by Borrower, as applicable, a Subordination and Attornment Agreement in
a  form  acceptable  to  Lender,  if  requested  by  Lender.
3.8.     INSURANCE.  Borrower  shall  have provided Lender with and Lender shall
         ---------
have  approved copies of certificates evidencing the insurance policies required
to  be  delivered  pursuant  to  the  Loan Documents and otherwise acceptable to
Lender  in  form  and  substance.
3.9.     COMPLIANCE  WITH  LAWS.  Borrower shall have submitted and Lender shall
         ----------------------
have  approved (a) a final certificate of occupancy (or the equivalent) for each
Property  and the Improvements thereon, (b) evidence satisfactory to Lender that
each  Property  and  the  Improvements thereon complies in all material respects
with  all  applicable laws (including, without limitation, all building, zoning,
density,  land  use,  ordinances,  regulations  and  planning  requirements),
covenants,  conditions  and  restrictions,  subdivision requirements (including,
without  limitation,  parcel  maps),  and  environmental  impact  and  other
environmental  requirements.
3.10.     COMMITMENT  FEE.  Borrower  shall have paid Lender a commitment fee in
          ---------------
the  amount of Four Hundred Fifty-Seven Thousand Five Hundred and No/100 Dollars
($457,500.00)  which  commitment  fee shall be nonrefundable and shall be deemed
fully  earned  upon  receipt and which commitment fee Lender acknowledges it has
received  as  of  the  date  hereof.
3.11.     AUDIT  REQUIREMENT.  Lender  shall have determined that the annualized
          ------------------
Net  Operating Income of the Project is at least Four Million and No/100 Dollars
($4,000,000.00).
3.12.     MANAGEMENT  CONTRACT.  Lender  shall  have  approved  the  management
          --------------------
contract  (the  "MANAGEMENT  CONTRACT") between Guarantor, as manager (Guarantor
being  sometimes  referred  to herein as "MANAGER"), and the applicable Borrower
for  each  Property.
3.13.     ADDITIONAL  ITEMS.  Lender  shall  have  received  such other items as
          -----------------
Lender  may  reasonably  require.
ARTICLE  IV.
REPRESENTATIONS  AND  WARRANTIES
--------------------------------
     As an inducement to Lender to disburse the Loan, Borrower hereby represents
and  warrants  as follows, which representations and warranties shall be true as
of  the  date  hereof  and  shall  remain  true throughout the term of the Loan:
4.1.     BORROWER  EXISTENCE.  Each Borrower is a limited liability company duly
         -------------------
formed,  validly  existing  and  in good standing under the laws of the State of
Washington  with  its  principal place of business at 3131 Elliott Avenue, Suite
500,  Seattle, Washington 98121.  Borrower is in good standing under the laws of
the State of Washington and is authorized to transact business in and is in good
     standing under the laws of the state in which its Property is located.  The
Loan  Documents  have each been duly authorized, executed and delivered and each
constitutes  the  duly  authorized,  valid  and  legally  binding  obligation of
Borrower  and  Guarantor,  as  the case may be, enforceable against Borrower and
Guarantor, as the case may be, in accordance with their respective terms, except
as  such  enforceability  may  be  limited by creditors' rights laws and general
principles  of  equity.
4.2.     OWNERSHIP  OF BORROWERS.  Guarantor is the manager of each Borrower and
         -----------------------
owns  one  hundred  percent  (100%) of the membership interests in each Borrower
free  and  clear  of  all  liens,  claims,  encumbrances  and  rights of others.
4.3.     OPERATING AGREEMENT  A true and complete copy of the agreement creating
         -------------------
each  Borrower  and any and all amendments thereto (collectively, the "OPERATING
AGREEMENT")  have been forwarded to Lender.  The Operating Agreement constitutes
the  entire agreement among the members of each Borrower and is binding upon and
enforceable  against Guarantor in its capacity as the sole member, in accordance
with  its  terms,  except  as  such  enforceability may be limited by creditors'
rights  laws  and  general principles of equity.  There are no other agreements,
oral  or  written,  to  which  Guarantor is a party relating to the ownership or
management  of  the  corporate  business  affairs of Borrower.  No breach exists
under  the Operating Agreement and no condition exists which, with the giving of
notice  or  passage  of  time  would  constitute  a  breach  under the Operating
Agreement.
4.4.     BORROWER'S  OTHER  AGREEMENTS.  No  Borrower  is  in  default under any
         -----------------------------
contract,  agreement  or  commitment  to  which  it  is a party.  The execution,
delivery  and compliance with the terms and provisions of this Agreement and the
Loan  Documents  will  not  (i) to the best of Borrower's knowledge, violate any
provisions  of  law  or  any applicable regulation, order or other decree of any
court  or  governmental  entity  by  which  Borrower or its Property is bound or
affected,  or  (ii)  conflict  or be inconsistent with, or result in any default
under,  any  contract,  agreement  or commitment to which any Borrower is bound.
Borrower  has  delivered  to  Lender copies of any agreements (including leases)
between  Borrower and any Affiliate of Borrower or Guarantor, related in any way
to  the  Project  or  any  part  thereof,  and any other agreements or documents
materially  affecting  the use and operation of the Project or any part thereof.
4.5.     THE  PROPERTY.  Fee  simple  title  to  each  Property  is  owned  by a
         -------------
Borrower,  free  and  clear  of  all  liens,  claims,  encumbrances,  covenants,
conditions  and  restrictions,  security  interests and claims of others, except
only  the  existing  Leases  and  such  exceptions as are set forth in the Title
Policy.  To the best of Borrower's knowledge, each Property and the Improvements
are  in  compliance  with  all  zoning requirements, building codes, subdivision
improvement  agreements,  and  all  covenants,  conditions  and  restrictions of
record.  The  zoning and subdivision approval of each Property and the right and
ability to, use or operate the Improvements thereon are not in any way dependent
on  or  related to any real estate other than such Property, except as disclosed
on  Exhibit  E  attached  hereto with respect to the Courtyard Property.  To the
    ----------
best of Borrower's knowledge, except as have been disclosed to Lender in writing
prior  to  the date hereof, there are no, nor are there any alleged or asserted,
violations  of  law,  regulations,  ordinances,  codes,  permits,  licenses,
declarations,  covenants,  conditions,  or  restrictions  of  record,  or  other
agreements  relating  to  the  Project,  or  any  part  thereof.
4.6.     PROPERTY  ACCESS.  Each  Property  is accessible through fully improved
         ----------------
and  dedicated  roads  accepted  for  maintenance  and  public use by the public
authority  having  jurisdiction.
4.7.     UTILITIES.  All  utility  services necessary and sufficient for the use
         ---------
or  operation  of  each  Property  and  the  Improvements  thereon are available
including  water, storm, sanitary sewer, gas, electric and telephone facilities.
4.8.     FLOOD HAZARDS/WETLANDS.  No Property, other than the Spring Property as
         ----------------------
described  on  Exhibit  F  attached hereto, is situated in an area designated as
               ----------
having  special flood hazards as defined by the Flood Disaster Protection Act of
1973,  as  amended,  or  as  a  wetlands  by  any  governmental  entity  having
jurisdiction  over  the  Property.
4.9.     TAXES/ASSESSMENTS.  There  are  no unpaid or outstanding real estate or
         -----------------
other  taxes  or  assessments  on or against any Property or Improvements or any
part  thereof,  except general real estate taxes not yet due or payable.  Copies
of  the  current general real estate tax bills with respect to each Property and
the  Improvements  thereon  have been delivered to Lender.  Said bills cover the
entire  Project  and  do not cover or apply to any other property.  Borrower has
not  received notice of any pending or contemplated action pursuant to which any
special  assessment  may  be  levied  against  any  portion  of  the  Project.
4.10.     EMINENT  DOMAIN.  Borrower  has  not  received  notice  of any eminent
          ---------------
domain  or condemnation proceeding pending and to Borrower's knowledge there are
none  threatened,  relating  to  any  part  of  the  Project.
4.11.     LITIGATION.  Except  as  set  forth in Exhibit B, there is no material
          ----------                             ---------
litigation,  arbitration  or  other  proceeding  or  governmental  investigation
pending  or, to the best of Borrower's knowledge, threatened against or relating
to  Guarantor, Borrower or any of their property, assets, or business, including
the  Project,  which  if  decided  adversely would affect the business, affairs,
assets  or  financial  condition  of  Borrower,  Guarantor,  any Property or the
Improvements  thereon  or  the  prospects  for  repayment  of  the  Loan.
4.12.     ACCURACY.  Neither  this  Agreement  nor  any  document,  financial
          --------
statement,  credit  information, certificate or statement furnished to Lender by
Borrower  or Guarantor contains any untrue statement of a material fact or omits
to  state a material fact which would affect Lender's decision to make the Loan.
4.13.     FOREIGN OWNERSHIP.  Neither Borrower nor Guarantor, as the sole member
          -----------------
of  Borrower,  is or will be, and no legal or beneficial interest of a member of
Borrower is or will be held, directly or indirectly, by a "FOREIGN CORPORATION",
"FOREIGN  PARTNERSHIP",  "FOREIGN  TRUST",  "FOREIGN  ESTATE", "FOREIGN PERSON",
"AFFILIATE"  of  a  "FOREIGN  PERSON"  or  a  "UNITED  STATES INTERMEDIARY" of a
"FOREIGN  PERSON"  within  the meaning of IRC Sections 897 and 1445, the Foreign
Investments  in  Real  Property  Tax  Act  of  1980,  the  International Foreign
Investment  Survey  Act  of 1976, the Agricultural Foreign Investment Disclosure
Act  of  1978,  or  the  regulations  promulgated  pursuant  to such Acts or any
amendments  to  such  Acts.
4.14.     SOLVENCY.  Neither  Borrower  nor Guarantor is insolvent and there has
          --------
been  no:  (i)  assignment made for the benefit of the creditors of any of them;
(ii)  appointment  of  a  receiver for any of them or for the property of any of
them;  or (iii) bankruptcy, reorganization, or liquidation proceeding instituted
by  or  against  any  of  them.
4.15.     FINANCIAL STATEMENT/NO CHANGE.  Borrower and Guarantor have heretofore
          -----------------------------
delivered  to  Lender  copies  of  the  most current financial statements of the
Project  and  Guarantor.  Said  financial  statements  were  prepared on a basis
consistent  with  that  of preceding years, and all of such financial statements
present fairly the financial condition of Borrower and Guarantor as of the dates
in  question  and  the results of operations for the periods indicated.  Neither
Borrower  nor any Guarantor has any material contingent liabilities not provided
for  or  disclosed  in  said  financial  statements.  There has been no material
adverse  change  since September 30, 2001, as to Guarantor, or since October 31,
2001,  as  to  the  Project,  in  the  structure,  business, operations, credit,
prospects  or  financial  condition  of  Borrower, the Guarantor or the Project.
4.16.     SINGLE  ASSET ENTITY.  No Borrower: (i) holds, directly or indirectly,
          --------------------
any  ownership  interest  (legal  or equitable) in any real or personal property
other than the interest which it owns in the Property and the Improvements; (ii)
is  a  shareholder  or partner or member of any other entity; and (iii) conducts
any  business other than the ownership, management and operation of the Project.
4.17.     NO  BROKER.  No  brokerage  commission or finder's fee is owing to any
          ----------
broker  or  finder  arising  out  of  any  actions  or  activity  of Borrower in
connection  with  the  Loan.
4.18.     GUARANTOR  EXISTENCE.  Guarantor is a corporation duly formed, validly
          --------------------
existing and in good standing under the laws of the State of Washington with its
principal  place  of  business  at  3131  Elliott  Avenue,  Suite  500, Seattle,
Washington  98121.
4.19.     CORPORATE  DOCUMENTS.  A  true  and  complete  copy of the articles of
          --------------------
incorporation and by-laws of Guarantor (collectively, the "CORPORATE DOCUMENTS")
have  been  furnished to Lender.  The Corporate Documents were duly executed and
delivered,  are  in  full  force and effect, and binding upon and enforceable in
accordance with their terms.  No breach exists under the Corporate Documents and
no  act has occurred and no condition exists which, with the giving of notice or
the  passage  of  time  would constitute a breach under the Corporate Documents.
4.20.     OTHER AGREEMENTS.  Guarantor is not in default in any material respect
          ----------------
under  any  contract,  agreement  or  commitment  to  which  it is a party.  The
execution,  delivery  and  compliance  with  the  terms  and  provisions of this
Agreement  and  the  Loan  Documents  will  not  (i)  to  the best of Borrower's
knowledge,  violate any provisions of law or any applicable regulation, order or
other  decree  of  any  court  or  governmental  entity,  or (ii) conflict or be
inconsistent  with,  or  result in any default under, any contract, agreement or
commitment to which Guarantor is bound.  Borrower has delivered to Lender copies
of any agreements (including leases) between Guarantor and any Affiliate related
in  any  way  to  the  Project  and any other agreements or documents materially
affecting  the  use  and  operation  of  the  Project,  other than copies of all
resident or patient occupancy agreements unless such agreements are requested by
Lender.
4.21.     SECURITY  DEPOSITS.  Neither  Borrower nor Manager has collected or is
          ------------------
in  receipt  of any security deposit from any resident of the Project, except as
described  on  Exhibit  C.
               ----------
4.22.     COMPLIANCE  WITH  HEALTH  CARE  LAWS.
          ------------------------------------
     (a)     Without  limiting  the  generality  of  any other provision of this
Agreement  including,  without  limitation, any other representation or warranty
made herein, Borrower and the Project  and, to Borrower's knowledge, each of any
Borrower's  or  Manager's  licensed  employees  and  contractors  (other  than
contracted  agencies)  in  the  exercise of their respective duties on behalf of
Borrower,  Manager (with respect to its operation of the Project) or any portion
of the Project, is in compliance with all applicable statutes, laws, ordinances,
rules and regulations of any federal, state or local governmental authority with
respect  to  regulatory  matters primarily relating to patient healthcare and/or
patient  healthcare  information,  including  without  limitation  the  Health
Insurance  Portability and Accountability Act of 1996, as amended, and the rules
and  regulations  promulgated  thereunder  ("HIPAA")  (collectively, "HEALTHCARE
LAWS")).  Borrower  has maintained in all material respects all records required
to  be maintained by any governmental agency or authority or otherwise under the
Healthcare  Laws  and,  to  the  knowledge  of  Borrower, there are no presently
existing  circumstances  which  would  result or likely would result in material
violations  of  the  Healthcare  Laws.  Borrower  and  its  Affiliates have such
permits,  licenses,  franchises,  certificates  and  other  approvals  or
authorizations  of governmental or regulatory authorities as are necessary under
applicable  law  to  own  their  respective  Properties  and  to  conduct  their
respective  business  in  connection  with  the  Properties  (including  without
limitation  such  permits  as  are  required  under  such  the Healthcare Laws).
(b)     To the extent that and for so long as (i) Borrower is a "covered entity"
within  the  meaning  of  HIPAA or (ii) Borrower or Manager (with respect to its
operation  of the Project) and/or their respective business and operations (with
respect  to  the  Project)  are  subject  to  or  covered  by  the  so-called
"Administrative Simplification" provisions of HIPAA, Borrower (x) has undertaken
or  will promptly undertake all necessary surveys, audits, inventories, reviews,
analyses  and/or  assessments  (including any necessary risk assessments) of all
areas  of  its  business  and  operations required by HIPAA and/or that could be
adversely  affected by the failure of Borrower to be HIPAA Compliant (as defined
below); (y) has developed or will promptly develop a detailed plan and time line
for  becoming  HIPAA  Compliant  (a  "HIPAA  COMPLIANCE  PLAN");  and  (x)  has
implemented  or will implement those provisions of such HIPAA Compliance Plan in
all  material  respects  necessary  to  ensure that Borrower is or becomes HIPAA
Compliant.   For purposes hereof, "HIPAA COMPLIANT" shall mean that Borrower (x)
is  or  will  be  in  compliance with each of the applicable requirements of the
so-called  "ADMINISTRATIVE SIMPLIFICATION" provisions of HIPAA on and as of each
date  that any part thereof, or any final rule or regulation thereunder, becomes
effective  in  accordance with its or their terms, as the case may be (each such
date,  a  "HIPAA  COMPLIANCE  DATE")  and (y) is not and could not reasonably be
expected to become, as of any date following any such HIPAA Compliance Date, the
subject  of any civil or criminal penalty, process, claim, action or proceeding,
or  any administrative or other regulatory review, survey, process or proceeding
(other  than  routine surveys or reviews conducted by any government health plan
or other accreditation entity) that could result in any of the foregoing or that
could  reasonably  be  expected  to  adversely  affect  Borrower's  business,
operations,  assets,  properties  or  condition  (financial  or  otherwise),  in
connection  with  any  actual  or  potential  violation  by Borrower of the then
effective  provisions  of  HIPAA
ARTICLE  V.
AFFIRMATIVE  COVENANTS
----------------------
5.1.     INSPECTION.  Subject  to the rights of tenants under Leases approved or
         ----------
deemed  approved  by Lender, Lender and its authorized agents may enter upon and
inspect  the Project at all reasonable times upon reasonable notice given orally
or  in  writing  to  Borrower.  Lender, at Borrower's expense, may retain one or
more  independent  consultants  to  periodically  inspect  the  Project  and all
documents,  drawings,  plans, and consultants' reports relating thereto.  During
the  term  of  the  Loan, Borrower shall pay to Lender, in addition to all other
amounts  due  under  the  Loan  Documents,  the sum of Three Thousand and No/100
Dollars ($3,000.00) per year per Property, payable in equal monthly installments
     of  Two  Hundred  and  Fifty  Dollars ($250) which shall be due and payable
concurrently  with  each  payment  due under Note A and which Lender shall apply
against  the cost of the aforesaid inspections; provided, however, so long as no
default exists under this Agreement or any of the other Loan Documents, Borrower
shall  not  be obligated to pay Lender an amount greater than Three Thousand and
No/100  Dollars  ($3,000.00) per Property per calendar year with respect to such
inspections  after  the  Closing  Date.  Nothing  contained in this Section 5.1.
                                                                    ------------
shall  limit  Borrower's  obligations  with  respect  to  inspections  performed
pursuant  to  the  terms  of  the  Environmental  Indemnity,  including  without
limitation  Borrower's  obligation to pay for, perform or caused to be performed
such  inspections.
5.2.     BOOKS  AND  RECORDS/AUDITS.  Borrower  shall  keep  and maintain at all
         --------------------------
times  at  Borrower's  address  stated  below, or at the property, or such other
place  as Lender may approve in writing, complete and accurate books of accounts
and  records adequate to reflect the results of the operation of the Project and
to  provide  the financial statements required to be provided to Lender pursuant
to  Section  5.3  below  and  copies  of  all written contracts, correspondence,
    ------------
reports  of  Lender's  independent  consultant,  if  any,  and  other  documents
   ---
affecting the Project.  Lender and its designated agents shall have the right to
   ---
inspect  and  copy any of the foregoing.  Additionally, after the occurrence and
during  the  continuance  of a default or if Lender has a reasonable basis to do
so,  Lender  may  audit and determine, in Lender's sole and absolute discretion,
the  accuracy of Borrower's records and computations.  The costs and expenses of
the  audit  shall be paid by Borrower if the audit discloses a monetary variance
in  any  financial information or computation of the aggregate income or expense
for  any  Property  equal  to  or greater than the greater of:  (i) five percent
(5%);  or  (ii)  Ten  Thousand  and  No/100  Dollars  ($10,000.00) more than the
computation  of income or expense submitted by Borrower; provided, however, if a
default  has  occurred  and  is  continuing,  Borrower  shall  pay the costs and
expenses  of  such  audit  regardless  of  any  variance  disclosed.
5.3.     FINANCIAL STATEMENTS; BALANCE SHEETS.  Borrower shall furnish to Lender
         ------------------------------------
and shall cause the Guarantor to furnish to Lender such financial statements and
other  financial  information as Lender may from time to time request.  All such
financial  statements  shall  show all material contingent liabilities and shall
accurately  and  fairly  present  the  results  of  operations and the financial
condition  of Borrower and/or Guarantor, as applicable, at the dates and for the
period  indicated.  Without  limitation of the foregoing, Borrower shall furnish
to  Lender  and  shall  cause  Guarantor  to  furnish  to  Lender  the following
statements:
5.3.1.     MONTHLY AND ANNUAL OPERATING STATEMENTS.  Statements of the operation
           ---------------------------------------
     of  the  Project  (including  a  current  rent  roll  and monthly operating
statements as of the last day of each month), to be delivered within thirty (30)
days after the end of each month and certified by Borrower as true, correct, and
complete, and yearly statements of the operation of the Project, to be delivered
within  one  hundred  twenty  (120)  days  after the end of each fiscal year and
certified  by  Borrower  as  true,  correct,  and  complete.
5.3.2.     ANNUAL  BALANCE  SHEETS  AND  FINANCIAL  STATEMENTS.  Annual  balance
           ---------------------------------------------------
sheets  and  financial  statements from Borrower within one hundred twenty (120)
days  of  the  end  of  each fiscal year and annual balance sheets and financial
statements from the Guarantor within one hundred eighty (180) days of the end of
each  fiscal year, each of which are true and correct in all respects, have been
prepared  in  accordance with sound accounting practices, and fairly present the
financial  condition(s)  of  the person(s) referred to therein as of the date(s)
indicated.  At  Lender's  request,  such  financial  statements  shall  include,
specific  information  concerning  Guarantor's  other  real  estate  holdings,
including property income and expenses, debt service requirements and occupancy.
5.3.3.     AUDITS.  If  Borrower  fails  to  furnish  or  cause  to be furnished
           ------
promptly  any report required by this Section 5.3, or if Lender reasonably deems
                                      -----------
such reports to be unacceptable, Lender may elect (in addition to exercising any
other right and remedy) to conduct an audit of all books and records of Borrower
which  in  any  way  pertain  to  the  Project  and  to prepare the statement or
statements  which  Borrower  or  Guarantor  failed to procure and deliver.  Such
audit  shall  be  made  and such statement or statements shall be prepared by an
independent  firm  of certified public accountants to be selected by Lender.  If
and  so  long as Guarantor is not a publicly held company, Lender shall have the
right  to  audit  Guarantor's books and records in accordance with this Section.
Borrower  shall  pay  all  reasonable expenses of such audit and other services,
which expenses shall be immediately due and payable with interest thereon at the
default  rate  contained  in  the  Notes.
5.4.     USE  OF  PROCEEDS.  Borrower  shall  use  the  proceeds of the Loan for
         -----------------
proper  business purposes.  No portion of the proceeds of the Loan shall be used
by  Borrower  in any manner that might cause the borrowing or the application of
such  proceeds to violate Regulation G, Regulation U, Regulation T or Regulation
X  or  any  other  regulation  of  the Board of Governors of the Federal Reserve
System  or  to violate the Securities Act of 1933 or the Securities Exchange Act
of  1934.
5.5.     NOTICE  OF  LITIGATION  OR  DEFAULT.  Borrower  shall  promptly provide
         -----------------------------------
Lender  with:
(a)     written  notice  of  any litigation, arbitration, or other proceeding or
governmental  investigation  pending or, to Borrower's or Guarantor's knowledge,
threatened  against  or  relating  to  any  Borrower  or  the  Property  or  the
Improvements  thereon;
(b)     written  notice  of  any  material  litigation,  arbitration,  or  other
proceeding  or  governmental  investigation  pending  or,  to  Borrower's  or
Guarantor's  knowledge,  threatened  against  or  relating  to  Guarantor;
(c)     a  copy  of  all notices of default and violations of laws, regulations,
codes, ordinances and the like received by any Borrower or Guarantor relating to
Borrower,  the  Collateral,  or  the  Project  or  any  part  thereof;  and
(d)     a  copy  of  all  notices  sent  to  or  received  from  Manager under a
Management  Agreement.
5.6.     AFFILIATE  TRANSACTIONS.  Prior  to entering into any agreement with an
         -----------------------
Affiliate  pertaining to the Project or any part thereof, Borrower shall deliver
to Lender a copy of such agreement, which shall be satisfactory to Lender in its
     sole  reasonable  discretion.  If requested by Lender, such agreement shall
provide  Lender  the  right  to  terminate  it upon Lender's (or its designee's)
acquisition  of  the  Project  or  any  part  thereof  through  foreclosure,  a
deed-in-lieu  of  foreclosure,  UCC  sale  or  otherwise.
     "AFFILIATE"  means  with  respect  to  any  individual,  trust,  estate,
partnership, limited liability company, corporation or any other incorporated or
unincorporated  organization  (each  a  "PERSON"),  a  Person  that  directly or
indirectly,  through one or more intermediaries, controls or is controlled by or
is  under  common  control  with  Borrower  or  any  Guarantor,  or any officer,
director,  partner  or shareholder of Borrower or any Guarantor, or any relative
of  any  of  the  foregoing.  The  term  "CONTROL" means possession, directly or
indirectly,  of the power to direct or cause the direction of the management and
policies  of  a  Person,  whether through the ownership of voting securities, by
contract  or  otherwise.
5.7.     ADVERTISEMENT.  Borrower  agrees  to  allow  Lender to advertise in the
         -------------
various  news or financial media that Heller has provided financing to Borrower.
5.8.     REPLACEMENT  RESERVE.  At  the  time  of and in addition to the monthly
         --------------------
installments  of  interest  and,  if applicable, principal, due under the Notes,
Borrower  shall  pay to Lender an amount equal to Twenty-Five and No/100 Dollars
($25.00)  per  unit in the Project (the "REPLACEMENT RESERVE").  The Replacement
Reserve may be commingled with the general funds of Lender, and these sums shall
not  be  deemed  to be held in trust for the benefit of Borrower.  So long as no
default  exists hereunder or under any of the other Loan Documents, Lender shall
credit  for  Borrower's  account  interest  in  such  funds  contained  in  the
Replacement  Reserve  (if  any)  at the money market account rate announced by a
national  banking  association  selected by Lender.  On the Maturity Date (as it
may  be  extended),  the  monies then remaining on deposit with Lender shall, at
Lender's  option,  be applied against the Indebtedness or if no Event of Default
is  continuing,  returned to Borrower.  So long as there is no Event of Default,
Borrower  may  request  Lender  to  disburse  funds from the Replacement Reserve
(which  request  will  include  a reasonably detailed description of the capital
expenditures  at  the  Property,  Borrower  intends to pay for with such funds),
which  request  shall  not  be  unreasonably  denied by Lender.  If requested by
Lender,  each  disbursement request will be accompanied by copies of invoices or
purchase  orders, lien waivers and other evidence reasonably required by Lender.
5.9.     FINANCIAL  COVENANTS.  Commencing  on  May  1,  2002  and  at all times
         --------------------
thereafter,  (a)  the  Debt  Coverage  Ratio  (as  determined by Lender) for the
trailing  three  (3)  months shall be greater than or equal to 1.25, and (b) the
Project  Yield  for the trailing three (3) month period shall be greater than or
equal  to  12.50%.
5.10.     INTENTIONALLY  OMITTED.
          ----------------------
5.11.     DEUTSCHE  BANK DEBT.  On or prior to April 26, 2003, the maturity date
          --------------------
of  the Deutsche Bank Debt shall be extended to a date which is thirty (30) days
beyond  the  then  applicable  Maturity  Date or shall be refinanced with a loan
having  a  maturity  date  which  is thirty (30) days beyond the then applicable
Maturity  Date.
ARTICLE  VI.
NEGATIVE  COVENANTS
-------------------
6.1.     NO  AMENDMENTS.  Borrower  shall  not  amend,  modify  or terminate, or
         --------------
permit  the  amendment,  modification  or  termination  of:
(a)     Operating  Agreement  or  Articles  of  Organization  of  Borrower;
(b)     the  Management  Agreement;  or
(c)     the  Corporate  Documents.
6.2.     NO  ADDITIONAL INDEBTEDNESS.  No Borrower shall, without Lender's prior
         ---------------------------
written consent, incur additional indebtedness, except for (a) trade payables in
     the  ordinary course of business, (b) management fees due to Manager if and
to  the  extent  the  same are accrued and unpaid as a result of the requirement
that  the  same be subordinated to the payments due to Lender, and (c) up to (i)
One Hundred Thousand and No/100 Dollars ($100,000.00) of additional indebtedness
for  purchase  money  indebtedness,  capital  leases  or  operating  leases  for
equipment  or  vehicles  (such amounts to be determined in the case of operating
leases on the basis of what the book value of the property subject to such lease
would  be  if  such property had been purchased on the commencement date of such
lease) for the La Casa Property or (ii) Seventy-Five Thousand and No/100 Dollars
($75,000.00) of additional indebtedness for purchase money indebtedness, capital
leases  or  operating  leases  for  equipment  or  vehicles  (such amounts to be
determined  in  the case of operating leases on the basis of what the book value
of  the  property  subject  to  such  lease  would  be if such property had been
purchased  on  the  commencement  date  of such lease) for each of the Courtyard
Property  and  Spring  Property.  Capital  or  operating  leases of equipment or
vehicles  shall  be  deemed to be additional indebtedness for borrowed money and
shall require Lender's prior written consent unless such lease would not require
Lender's  consent  under  clause  (b)  above.
6.3.     NO  COMMINGLING  FUNDS.  Borrower shall not commingle the funds related
         ----------------------
to  the  Property  with  funds  from  any  other  property  or  venture.
6.4.     PROPERTY  MANAGER.  Borrower  shall  not change or permit the change in
         -----------------
Manager  or  amend  or  terminate the Management Contract without Lender's prior
written  consent,  which  shall  not  be  unreasonably  withheld.
6.5.     LIENABLE  WORK.  No  excavation, construction, earth work, site work or
         --------------
any  other  mechanic's  lienable work shall be done to or for the benefit of the
Project  or any part thereof, without Lender's approval (which approval will not
be  unreasonably  withheld), except for (a) normal repair and maintenance in the
ordinary course of business and (b) work related to the alteration, replacement,
repair  and maintenance to a Property not estimated to have an aggregate cost in
excess of (i) with respect to the La Casa Property, One Hundred Thousand Dollars
($100,000)  or  (ii)  with  respect  to  the  Courtyard  Property  or the Spring
Property,  Seventy-Five  Thousand  Dollars  ($75,000).
6.6.     CONVERSION.  Borrower  shall  not, and shall not permit, the Project or
         ----------
any  portion thereof to be converted or take any preliminary actions which could
lead  to  a  conversion  to  condominium  or  cooperative  form  or  ownership.
6.7.     USE  OF PROJECT.  Unless required by applicable law, Borrower shall not
         ---------------
permit  changes  in  the use of any part of the Project from the use existing at
the  Closing  Date  or other uses reasonably incidental thereto.  Borrower shall
not  initiate  or  acquiesce  in  a change in the plat of subdivision, or zoning
classification  of  any  Property  without  Lender's  prior  written  consent.
ARTICLE  VII.
EVENTS  OF  DEFAULT;  ACCELERATION  OF  INDEBTEDNESS;  REMEDIES
---------------------------------------------------------------
7.1.     EVENTS  OF DEFAULT.  The occurrence of any one or more of the following
         ------------------
events  shall  constitute  an  "EVENT  OF  DEFAULT"  under  this  Agreement:
(a)     Failure of Borrower to pay, within ten (10) days of the due date, any of
     the payment obligations of a Borrower to Lender ("INDEBTEDNESS"), including
any  payment due under the Notes, this Agreement or the other Loan Documents; or
(b)     Failure  of  Borrower  to strictly comply with the provisions of Section
                                                                         -------
4.16  (single  asset  entity) or 5.1 (inspection), 5.9 (financial covenants), or
  --                             ---               ---
5.11  (Deutsche  Bank  debt)  of  this  Agreement;  or
  --
(c)     Breach  of  any  covenant,  representation or warranty other than as set
forth  in  subsections  (a)  and (b) above which is not cured within thirty (30)
           -------------------------
days  after  notice;  provided,  however, if such breach cannot by its nature be
cured  within  thirty  (30)  days,  and  Borrower  diligently pursues the curing
thereof  (and then in all events cures such failure within sixty (60) days after
the  original  notice  thereof),  Borrower shall not be in default hereunder; or
(d)     A  petition  under  any Chapter of Title 11 of the United States Code or
any  similar  law or regulation is filed by or against Borrower or any Guarantor
(and  in the case of an involuntary petition in bankruptcy, such petition is not
discharged  within  sixty  (60) days of its filing), or a custodian, receiver or
trustee  for any of the Project is appointed, or Borrower or any Guarantor makes
an  assignment  for  the  benefit  of  creditors,  or  any  of them are adjudged
insolvent  by  any  state  or federal court of competent jurisdiction, or any of
them  admit  their insolvency or inability to pay their debts as they become due
or  an  attachment  or  execution  is  levied  against  any  of  the Project; or
(e)     The  occurrence  of  a  default  and  the  expiration of any cure period
applicable  thereto  under  any  Loan  Document;  or
(f)     Borrower  shall  default  in the payment of any indebtedness (other than
the Indebtedness) and such default is declared and is not cured within the time,
if  any,  specified  therefor  in  any  agreement  governing  the  same;  or
(g)     Any  statement,  report  or  certificate  made or delivered to Lender by
Borrower  or  any  Guarantor is not materially true and complete at any time; or
(h)     The  occurrence  of  a  default  under  the  Management  Agreement which
continues  beyond  the  expiration  of any applicable cure period thereunder; or
(i)     There  shall  occur a material adverse change in the financial condition
or  business  prospects  of  Borrower  or  any  Guarantor.
7.2.     ACCELERATION;  REMEDIES.  Upon the occurrence of an Event of Default at
         -----------------------
the  option of Lender, the Indebtedness shall become immediately due and payable
without notice to Borrower and Lender shall be entitled to all of the rights and
     remedies  provided  in  the  Loan  Documents  or at law or in equity.  Each
remedy  provided  in  the Loan Documents is distinct and cumulative to all other
rights  or  remedies  under the Loan Documents or afforded by law or equity, and
may  be  exercised  concurrently,  independently,  or successively, in any order
whatsoever.
ARTICLE  VIII.
MISCELLANEOUS
-------------
8.1.     EXPENDITURES  AND EXPENSES.  Borrower shall promptly pay all reasonable
         --------------------------
Costs  (defined  below) incurred by Lender in connection with the documentation,
modification,  workout, collection or enforcement of the Loan or any of the Loan
Documents  (as  applicable)  and  all such Costs shall be included as additional
Indebtedness  bearing  interest at the Default Rate set forth in the Notes until
paid.  For the purposes hereof "COSTS" means all expenditures and expenses which
     may  be  paid or incurred by or on behalf of Lender including repair costs,
payments  to remove or protect against liens, attorneys' fees (including fees of
Lender's  inside  counsel), receivers' fees, engineers' fees, accountants' fees,
independent  consultants'  fees (including environmental consultants), all costs
and  expenses  incurred  in  connection  with  any  of  the  foregoing, Lender's
out-of-pocket  costs  and  expenses  related  to  any audit or inspection of the
Project,  outlays  for  documentary and expert evidence, stenographers' charges,
stamp taxes, publication costs, and costs (which may be estimates as to items to
be  expended  after  entry  of  an  order  or  judgment)  for procuring all such
abstracts  of  title,  title  and UCC searches, and examination, title insurance
policies,  Torrens' Certificates (if applicable) and similar data and assurances
with  respect  to  title  as  Lender  may  deem  reasonably  necessary either to
prosecute  any  action  or to evidence to bidders at any foreclosure sale of the
Project or any part thereof the true condition of the title to, or the value of,
the  Project  or  any  part  thereof.
8.2.     DISCLOSURE  OF  INFORMATION.  Lender shall have the right (but shall be
         ---------------------------
under  no obligation) to make available to any party for the purpose of granting
participations  in  or  selling, transferring, assigning or conveying all or any
part  of  the  Loan  (including  any  governmental  agency  or authority and any
prospective  bidder  at any foreclosure sale of the Project or any part thereof)
any  and  all information which Lender may have with respect to the Project, any
Borrower  or  any  Guarantor  or  any  of  their Affiliates, whether provided by
Borrower,  Guarantor  or  any  third  party  or  obtained  as  a  result  of any
environmental  assessments.  Borrower and Guarantor agree that Lender shall have
no  liability  whatsoever  as a result of delivering any such information to any
third  party, and each Borrower and Guarantor, on behalf of themselves and their
successors  and  assigns,  hereby  release and discharge Lender from any and all
liability,  claims, damages, or causes of action, arising out of, connected with
or  incidental  to  the  delivery  of  any  such information to any third party.
8.3.     SALE  OF LOAN.  Lender, at any time and without the consent of Borrower
         -------------
or  the  Guarantor,  may  grant  participations in or sell, transfer, assign and
convey  all  or any portion of its right, title and interest in and to the Loan,
this  Agreement and the other Loan Documents, any guaranties given in connection
with  the  Loan  and  any  collateral  given  to  secure  the  Loan.
8.4.     FORBEARANCE  BY  LENDER  NOT  A  WAIVER.  Any  forbearance by Lender in
         ---------------------------------------
exercising  any  right  or  remedy under any of the Loan Documents, or otherwise
afforded by applicable law, shall not be a waiver of or preclude the exercise of
any  right  or remedy.  Lender's acceptance of payment of any sum secured by any
of  the  Loan Documents after the due date of such payment shall not be a waiver
of Lender's right to either require prompt payment when due of all other sums so
secured  or  to  declare  a  default  for  failure  to make prompt payment.  The
procurement  of  insurance or the payment  of taxes or other liens or charges by
Lender shall not be a waiver of Lender's right to accelerate the maturity of the
Loan,  nor  shall  Lender's  receipt  of  any awards, proceeds, or damages under
Section  4  of  any  Mortgage operate to cure or waive Borrower's or Guarantor's
     -----
default  in  payment of sums secured by any of the Loan Documents.  With respect
to all Loan Documents, only waivers made in writing by Lender shall be effective
against  Lender.
8.5.     GOVERNING  LAW;  SEVERABILITY.  The Loan Documents shall be governed by
         -----------------------------
and  construed  in  accordance  with the internal laws of the State of Illinois,
except that the provisions of the laws of the State where the Project is located
shall  be  applicable  to  the  creation, perfection and enforcement of the lien
created  by the Mortgages and the provisions of the State where the bank holding
the  Approved  Bank  Account(s)  is  (are)  located  shall  be applicable to the
creation,  perfection,  and enforcement of the security interest in the Security
Deposits.  The  invalidity,  illegality  or unenforceability of any provision of
this  Agreement  shall  not  affect  or  impair  the  validity,  legality  or
enforceability  of  the  remainder  of  this  Agreement,  and  to  this end, the
provisions  of  this  Agreement  are  declared  to  be  severable.
8.6.     RELATIONSHIP.  The  relationship  between  Lender and Borrower shall be
         ------------
that  of  creditor-debtor  only.  No term in this Agreement or in the other Loan
Documents and no course of dealing between the parties shall be deemed to create
any  relationship  of agency, partnership or joint venture or any fiduciary duty
by  Lender  to  any  other  party.
8.7.     INDEMNITY.  Borrower shall indemnify, protect, hold harmless and defend
         ---------
Lender,  its  successors, assigns, shareholders, directors, officers, employees,
and  agents  (each,  an "INDEMNITEE") from and against any and all loss, damage,
cost,  expense  (including  attorneys'  fees),  and  claims arising out of or in
connection  with (a) the Project, (b) the Collateral, (c) any act or omission of
any  Borrower,  any Guarantor, Manager, or their respective employees or agents,
whether  actual  or  alleged,  and (d) any and all brokers' commissions or other
costs  of  similar  type  by any party in connection with the Loan, in each case
except  to  the extent arising from the indemnitee's gross negligence or willful
misconduct.  Upon  written request by an Indemnitee, Borrower will undertake, at
its  own  cost  and  expense,  on  behalf  of  such  Indemnitee,  using  counsel
satisfactory  to  the  Indemnitee, the defense of any legal action or proceeding
whether or not such Indemnitee shall be a party and for which such Indemnitee is
entitled to be indemnified pursuant to this section.  At Lender's option, Lender
may,  at  Borrower's  expense,  prosecute  or  defend  any  action involving the
priority,  validity  or  enforceability  of  any  of  the  Loan  Documents.
     Any  provision in this Agreement by which one party agrees to indemnify the
other, or the agents and employees of the Indemnitee, against liability, claims,
damages,  losses  or  expenses,  including  attorney fees, arising out of bodily
injury  to  persons or damage to property caused by, or resulting from, in whole
or  in part, the negligence, act or omission of the Indemnitee, or the agents or
employees  of  the Indemnitee, or any legal entity for whose negligence, acts or
omission  any  of  them  may  be  liable, shall not extend to liability, claims,
damages,  losses  or  expenses,  including  attorney  fees,  arising  out  of:
(i)     The  preparation  or  approval  of  maps,  drawings,  opinions, reports,
surveys,  change  orders,  designs  or  specifications by the Indemnitee, or the
agents  or  employees  of  the  Indemnitee;  or
(ii)     The  giving of or the failure to give directions or instructions by the
Indemnitee,  or  the agents or employees of the Indemnitee, which such giving of
or  failure  to  give  directions or instructions is the primary cause of bodily
injury  to  persons  or  damage  to  property.
This Section shall be deemed to be incorporated by reference into the other Loan
Documents.
8.8.     NOTICE.  Any  notice or other communication required or permitted to be
         ------
given  shall  be in writing addressed to the respective party as set forth below
and  may  be  personally served, telecopied or sent by overnight courier or U.S.
Mail  and  shall  be deemed given:  (a) if served in person, when served; (b) if
telecopied,  on the date of transmission if before 3:00 p.m. (Chicago time) on a
business  day; provided that a hard copy of such notice is also sent pursuant to
               --------
(c)  or  (d) below; (c) if by overnight courier, on the first business day after
delivery  to  the courier; or (d) if by U.S. Mail, certified or registered mail,
return  receipt  requested  on  the  fourth  (4th) day after deposit in the mail
postage  prepaid.

c/o Emeritus Corporation
3131 Elliott Avenue
Suite 500
Seattle, Washington  98121
Attn:  Raymond R. Brandstrom
Notices to Borrower:   Facsimile No. (206) 301-4500
The Nathanson Group PLLC
1520 Fourth Avenue
Sixth Floor
Seattle, Washington  98101
Attn:  Randi S. Nathanson
With a copy to:   Facsimile No. (206) 623-1738
Heller Healthcare Finance, Inc.
Loan No. 21-240
2 Wisconsin Circle, Suite 400
Chevy Chase, Maryland  20815
Attn:  Manager, Portfolio Administration Group
Notices to Lender:   Telecopy: (301) 664-9843
Heller Healthcare Finance, Inc.
Loan No. 21-240
816 Congress Avenue, Suite 1900
Austin, Texas  78701
Attn:  Diana Pennington, Vice President and Chief Counsel, Senior Living Group
With a copy to:   Telecopy: (512) 505-5487
Heller Healthcare Finance, Inc.
Loan No. 21-240
500 West Monroe Street
Chicago, Illinois  60661
Attn:  Kevin McMeen, Senior Vice President
And a copy to:   Telecopy: (312) 441-7119


8.9.     SUCCESSORS  AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS; AND
         -----------------------------------------------------------------------
CAPTIONS.  The  covenants  and  agreements contained in the Loan Documents shall
--------
bind,  and  the  rights thereunder shall inure to, the respective successors and
--
assigns  of  Lender,  Borrower  and Guarantor, subject to the provisions of this
--
Agreement.  All covenants and agreements of each Borrower and Guarantor shall be
--
     joint  and  several.  In  exercising any rights under the Loan Documents or
taking  any  actions provided for therein, Lender may act through its employees,
agents  or  independent  contractors  as authorized by Lender.  The captions and
headings  of  the  paragraphs and sections of this Agreement are for convenience
only  and  are  not  to  be  used  to interpret or define the provisions hereof.
8.10.     TERMS  AND  USAGE.  As used in the Loan Documents "BUSINESS DAY" means
          -----------------
any  day, other than a Saturday or a Sunday, when banks in Chicago, Illinois are
not  required  or  authorized  to  be  closed.
8.11.     INTENTIONALLY  OMITTED.
          -----------------------
8.12.     TIME  OF  ESSENCE.  Time  is  of the essence of this Agreement and the
          -----------------
other Loan Documents and the performance of each of the covenants and agreements
contained  herein  and  therein.
8.13.     VENUE.  BORROWER  HEREBY  CONSENTS TO THE JURISDICTION OF ANY STATE OR
          -----
FEDERAL  COURT  LOCATED  WITHIN  THE  COUNTY  OF  COOK,  STATE  OF  ILLINOIS AND
IRREVOCABLY  AGREES  THAT,  SUBJECT  TO  LENDER'S  ELECTION,  ALL  ACTIONS  OR
PROCEEDINGS  ARISING  OUT  OF  OR  RELATING  TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS  SHALL  BE  LITIGATED  IN SUCH COURTS.  BORROWER EXPRESSLY SUBMITS AND
CONSENTS  TO  THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM  NON  CONVENIENS.  BORROWER  HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON BORROWER BY
CERTIFIED  OR  REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWER,
AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE
TEN  (10)  DAYS  AFTER  THE  SAME  HAS  BEEN  POSTED.
8.14.     JURY  TRIAL WAIVER.  BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE
          ------------------
RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO,
THE  SUBJECT  MATTER  OF  THIS  AGREEMENT  AND  THE OTHER LOAN DOCUMENTS AND THE
BUSINESS  RELATIONSHIP  THAT  IS  BEING  ESTABLISHED.  THIS WAIVER IS KNOWINGLY,
INTENTIONALLY  AND  VOLUNTARILY  MADE  BY  BORROWER  AND  LENDER,  AND  BORROWER
ACKNOWLEDGES  THAT  NEITHER LENDER NOR ANY PERSON ACTING ON BEHALF OF LENDER HAS
MADE  ANY  REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR HAS
TAKEN  ANY  ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.  BORROWER AND
LENDER  ACKNOWLEDGE  THAT  THIS  WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A
BUSINESS  RELATIONSHIP,  THAT  EACH OF THEM HAS ALREADY RELIED ON THIS WAIVER IN
ENTERING  INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT EACH OF THEM
WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS.  BORROWER
AND  LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR HAVE HAD THE
OPPORTUNITY  TO  BE  REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND THE OTHER
LOAN  DOCUMENTS  AND  IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.
8.15.     COUNTERPARTS.  This  Agreement  may  be  executed  in  multiple
          ------------
counterparts,  each  of  which  shall constitute an original, and together shall
          --
constitute  the  Agreement.
8.16.     FINAL  AGREEMENT/MODIFICATION.  This  Agreement  (including the Senior
          -----------------------------
Housing  Rider attached hereto and hereby made a part hereof), together with the
other  Loan Documents, represents the entire agreement among Borrower, Guarantor
and Lender and supersedes all prior agreements among the parties with respect to
the  Loan.  This Agreement and the other Loan Documents  may only be modified by
written  instrument  executed  by  the  applicable  parties.

<PAGE>
IN  WITNESS  WHEREOF,  the  parties  hereto  have executed this Agreement or has
caused  the  same  to be executed by their duly authorized representatives as of
the  date  first  above  written.
BORROWER:
ESC-PUYALLUP,  LLC,  a  Washington  limited  liability  company

By:     Emeritus  Corporation,  its  sole  member
     By  /s/  Raymond  R.  Brandstrom
         ----------------------------
     Name  Raymond  R.  Brandstrom
           -----------------------
     Its  Vice  President  of  Finance
          ----------------------------
ESC-PORT  ST.  RICHIE,  LLC,  Washington  limited  liability  company

By:     Emeritus  Corporation,  its  sole  member
     By  /s/  Raymond  R.  Brandstrom
         ----------------------------
     Name  Raymond  R.  Brandstrom
           -----------------------
     Its  Vice  President  of  Finance
          ----------------------------
ESC-BOZEMAN,  LLC,  Washington  limited  liability  company

By:     Emeritus  Corporation,  its  sole  member
     By  /s/  Raymond  R.  Brandstrom
         ----------------------------
     Name  Raymond  R.  Brandstrom
           -----------------------
     Its  Vice  President  of  Finance
          ----------------------------


LENDER:

HELLER  HEALTHCARE  FINANCE,  INC.,
a  Delaware  corporation


By  /s/  Kevin  J.  McMeen
    ----------------------
Name  Kevin  J.  McMeen
      -----------------
Its  Senior  Vice  President
     -----------------------


<PAGE>


                                   EXHIBIT A-1
Property:     La  Casa  Property
--------
Number  of  Units:     193  Units
-----------------

Legal  Description:
------------------
THE  WEST  60 FEET OF TRACT 49 AND THE EAST 270 FEET OF TRACT 50, IN SECTION 16,
TOWNSHIP  26  SOUTH,  RANGE  16  EAST,  PASCO COUNTY, FLORIDA, SAID TRACTS BEING
DESIGNATED  IN ACCORDANCE WITH THE PLAT OF TAMPA AND TARPON SPRINGS LAND COMPANY
SUBDIVISION RECORDED IN PLAT BOOK 1, PAGES 68, 69, AND 70, OF THE PUBLIC RECORDS
OF  PASCO  COUNTY,  FLORIDA.
LESS  ROAD  RIGHT  OF  WAY,  ALSO  DESCRIBED  AS:
A PORTION OF TRACTS 49 AND 50, TAMPA AND TARPON SPRINGS LAND COMPANY SUBDIVISION
OF  SECTION  16,  TOWNSHIP 26 SOUTH, RANGE 16 EAST, AS SHOWN ON PLAT RECORDED IN
PLAT  BOOK  1,  PAGES  68,  69  AND  70,  OF THE PUBLIC RECORDS OF PASCO COUNTY,
FLORIDA,  BEING  MORE  FULLY  DESCRIBED  AS  FOLLOWS:
COMMENCE  AT  THE  NORTHEAST  CORNER  OF SAID TRACT 49; THENCE NORTH 89  45' 20"
WEST,  ALONG  THE  NORTHERLY BOUNDARY LINE OF SAID TRACT 49, 377.29 FEET; THENCE
SOUTH  00  15'  48"  WEST, 33.00 FEET TO THE POINT OF BEGINNING; THENCE SOUTH 00
15'  48"  WEST,  ALONG THE EASTERLY BOUNDARY LINE OF THE WEST 60.00 FEET OF SAID
TRACT  49,  630.28  FEET;  THENCE  NORTH  89  42'  50" WEST, ALONG THE SOUTHERLY
BOUNDARY  LINE  OF A PORTION OF SAID TRACTS 49 AND 50, 330.00 FEET; THENCE NORTH
00  15'  48"  EAST,  ALONG THE WESTERLY BOUNDARY LINE OF THE EAST 270.00 FEET OF
SAID  TRACT  50, 630.04 FEET; THENCE SOUTH 89  45' 20" EAST, ALONG THE SOUTHERLY
RIGHT  OF WAY LINE OF TROUBLE CREEK ROAD, 330.00 FEET TO THE POINT OF BEGINNING.


<PAGE>
                                   EXHIBIT A-2
Property:     Spring  Property
--------
Number  of  Units:     72  Units
-----------------

Legal  Description:
------------------
LOT  2 IN BLOCK 2 OF SPRING MEADOWS SUBDIVISION, BEING A PORTION OF UNPLATTED SW
1/4  OF  SECTION  19  AND  CERTIFICATE OF SURVEY 819A, SITUATED IN THE NW 1/4 OF
SECTION  19,  T.2S.,  R.6E.,  P.M.M., GALLATIN COUNTY, MONTANA, ACCORDING TO THE
PLAT  ON  FILE  AND  OF RECORD IN THE OFFICE OF THE COUNTY CLERK AND RECORDER OF
GALLATIN  COUNTY,  MONTANA  (PLAT  J-145).



<PAGE>
                                   EXHIBIT A-3
Property:     Courtyard  Property
--------
Number  of  Units:     101  Units
-----------------

Legal  Description:
------------------
LOT  1  OF  COLUMBIA PACIFIC MANAGEMENT BINDING SITE PLAN RECORDED JULY 19, 1995
UNDER  AUDITOR'S  NO.  9507190625,  RECORDS  OF  PIERCE  COUNTY,  WASHINGTON.
EXCEPT  THE  SOUTH  30 FEET THEREOF DEEDED TO THE CITY OF PUYALLUP, A WASHINGTON
MUNICIPAL  CORPORATION,  BY  DEED  RECORDED  UNDER  AUDITOR'S  NO.  9701090196.
TOGETHER WITH A NON-EXCLUSIVE ROAD EASEMENT AREA FOR PURPOSES OF INGRESS, EGRESS
AND  UTILITIES  AS  DELINEATED  ON COLUMBIA PACIFIC MANAGEMENT BINDING SITE PLAN
RECORDED  JULY 19, 1995 UNDER AUDITOR'S NO. 9507190625, AS GRANTED BY INSTRUMENT
RECORDED  UNDER  RECORDING  NUMBER  9806190616.
EXCEPT  FROM  SAID  EASEMENT  THAT  PORTION  LYING  WITHIN  SAID  LOT  1.
ALSO  TOGETHER  WITH A NON-EXCLUSIVE FENCE EASEMENT AREA FOR PURPOSES OF FENCING
AND  LANDSCAPING  AS  GRANTED  BY  INSTRUMENT  RECORDED  UNDER  RECORDING NUMBER
9806190616,  OVER  LOTS  2,  3 AND 4 OF COLUMBIA PACIFIC MANAGEMENT BINDING SITE
PLAN  RECORDED  JULY  19,  1995  UNDER  AUDITOR'S  NO.  9507190625.
ALSO  TOGETHER WITH A NON-EXCLUSIVE STORM DRAINAGE EASEMENT AREA FOR PURPOSES OF
STORM  DRAINAGE  AS  GRANTED  BY  INSTRUMENT  RECORDED  UNDER  RECORDING  NUMBER
9806190616,  OVER  LOTS  2,  3 AND 4 OF COLUMBIA PACIFIC MANAGEMENT BINDING SITE
PLAN  RECORDED  JULY  19,  1995  UNDER  AUDITOR'S  NO.  9507190625.
ALSO  TOGETHER  WITH  A NON-EXCLUSIVE PERPETUAL EASEMENT OVER, UNDER, ACROSS AND
THROUGH  PORTION  OF  LOT  2  OF  COLUMBIA  PACIFIC MANAGEMENT BINDING SITE PLAN
RECORDED JULY 19, 1995 UNDER AUDITOR'S NO. 9507190625, NECESSARY FOR PURPOSES OF
CONSTRUCTING,  MODIFYING,  MAINTAINING, OPERATING, AND USING THOSE LOT 1 OFFSITE
IMPROVEMENTS  LOCATED  ON  SAID  LOT  2, AS GRANTED BY INSTRUMENT RECORDED UNDER
RECORDING  NUMER  9806190616.
ALSO  TOGETHER  WITH  A NON-EXCLUSIVE PERPETUAL EASEMENT OVER, UNDER, ACROSS AND
THROUGH  PORTION  OF  LOT  4  OF  COLUMBIA  PACIFIC MANAGEMENT BINDING SITE PLAN
RECORDED JULY 19, 1995 UNDER AUDITOR'S NO. 9507190625, NECESSARY FOR PURPOSES OF
CONSTRUCTING,  MODIFYING,  MAINTAINING, OPERATING, AND USING THOSE LOT 1 OFFSITE
IMPROVEMENTS  LOCATED  ON  SAID  LOT  4, AS GRANTED BY INSTRUMENT RECORDED UNDER
RECORDING  NUMBER  9806190616.
SITUATE  IN  THE  CITY  OF  PUYALLUP,  PIERCE  COUNTY,  WASHINGTON.

<PAGE>
                                    EXHIBIT B
                                   LITIGATION
                                   ----------

                                      None


<PAGE>
                                    EXHIBIT C
                                SECURITY DEPOSITS
                                -----------------


<PAGE>
                                    EXHIBIT D
                                 RELEASE PRICES
                                 --------------

Spring  Property     $  7,000,000
La  Casa  Property     $14,850,000
------------------     -----------
Courtyard  Property     $  8,700,000
-------------------     ------------


<PAGE>
                                    EXHIBIT E
                   APPURTENANT EASEMENT FOR COURTYARD PROPERTY
                   -------------------------------------------
1.     A  non-exclusive  road  easement area for purposes of ingress, egress and
utilities  as  delineated  on  Columbia  Pacific  Management  Binding  Site Plan
recorded  July 19, 1995 under Auditor's No. 9507190625, as granted by instrument
recorded  under  Recording  No.  9806190616.

2.     A  non-exclusive  fence  easement  area  for  purposes  of  fencing  and
landscaping  as  granted  by instrument recorded under Recording No. 9806190616,
over  Lots  2, 3 and 4 of Columbia Pacific Management Binding Site Plan recorded
July  19,  1995  under  Auditor's  No.  9507190625.

3.     A  non-exclusive  storm  drainage  easement  area  for  purposes of storm
drainage  as granted by instrument recorded under Recording No. 9806190616, over
Lots  2,  3 and 4 of Columbia Pacific Management Binding Site Plan recorded July
19,  1995  under  Auditor's  No.  9507190625.

4.     A  non-exclusive  perpetual  easement  over,  under,  across  and through
portion  of Lot 2 of Columbia Pacific Management Binding Site Plan recorded July
19,  1995,  under  Auditor's  No.  9507190625,  necessary  for  purposes  of
constructing,  modifying,  maintaining,  operating and using those Lot 1 Offsite
improvements  located  on  said  Lot  2, as granted by instrument recorded under
Recording  No.  9806190616.

5.     A  non-exclusive  perpetual  easement  over,  under,  across  and through
portion  of Lot 4 of Columbia Pacific Management Binding Site Plan recorded July
19,  1995,  under  Auditor's  No.  9507190625,  necessary  for  purposes  of
constructing,  modifying,  maintaining,  operating and using those Lot 1 Offsite
improvements  located  on  said  Lot  2, as granted by instrument recorded under
Recording  No.  9806190616.

<PAGE>
                                    EXHIBIT F
                  FLOOD HAZARD INFORMATION FOR SPRING PROPERTY
                  --------------------------------------------
     The  Survey  for  the  Spring Property, dated December 2001 and prepared by
Gaston  Engineering reflects that a portion of the Spring Property is located in
a  100-Year Flood Plain and is in an identified "flood prone area" as defined by
the  U.S.  Department  of  Housing  and Urban Development, pursuant to the Flood
Disaster  Protection  Act  of  1973, as amended, as reflected by Flood Insurance
Rate  Map Panel #3000028 0016c, dated July 15, 1988, which such map panel covers
the  area  in  which  the  property  is situated.  No portion of the building is
located  in  the  "flood  prone  area."


<PAGE>
                                   SCHEDULE I

                             INDEX OF DEFINED TERMS

DEFINED  TERM     PAGE     DEFINED  TERM     PAGE
-------------     ----     -------------     ----



<PAGE>
Administrative  Simplification     14
Affiliate     16
Agreement     2
Assignment  of  Leases     3
Assignments  of  Leases     3
Base  Rate     5
Borrower     2
Bozeman     2
business  day     23
Closing  Date     3
Collateral     6
control     16
Corporate  Documents     12
Costs     20
Courtyard  at  the  Willows     2
Courtyard  Property     2
Debt  Coverage  Ratio     4
Effective  Rental  Income     4
Environmental  Indemnity     7
Event  of  Default     19
Exit  Fee     6
Expenses     4
Extension  Notice     4
Guarantor     7
Guaranty     7
Healthcare  Laws     13
HIPAA     13
HIPAA  Compliance  Date     14
HIPAA  Compliance  Plan     14
HIPAA  Compliant     14
Improvements     2
Indebtedness     19
Indemnitee     21
Interest  Rate     5
La  Casa  Grande     2
La  Casa  Property     2
Leases     8
Lender     2
Licensee     3
Licensee  Leases     3
Licensees     3
Loan     2
Loan  Documents     3
Management  Contract     9
Manager     9
Maturity  Date     3
Mortgage     3
Mortgages     3
Net  Operating  Income     4
Note  A     2
Note  B     2
Notes     2
Operating  Agreement     10
Person     16
Port  Richie     2
Project     2
Project  Yield     4
Properties     2
Property     2
Puyallup     2
Qualified  Non-Residential  Lease     8
Release  Price     7
Repayment  Date     5
Replacement  Reserve     17
SNDAs     7
Spring  Meadows     2
Spring  Property     2
Title  Policy     8

<PAGE>








</TEXT>
</DOCUMENT>
