EMERITUS CORP\WA\
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>exhibit10732.txt
<TEXT>


                                                             LOAN NO. 07-0004024
                                 LOAN AGREEMENT
                                      AMONG
                      GENERAL ELECTRIC CAPITAL CORPORATION,
                             A DELAWARE CORPORATION,
                                    AS LENDER
                                       AND
                             EMERITUS REALTY II, LLC
                            EMERITUS REALTY III, LLC
                             EMERITUS REALTY V, LLC
                            EMERITUS REALTY VII, LLC
                            EMERITUS REALTY XIV, LLC
                        EMERITUS REALTY BOZEMAN, LLC, AND
                         EMERITUS REALTY PUYALLUP, LLC,
                 EACH A DELAWARE LIMITED LIABILITY COMPANY, AND
                           ESC-PORT ST. RICHIE, LLC, A
                      WASHINGTON LIMITED LIABILITY COMPANY,
                            COLLECTIVELY, AS BORROWER
                          LOAN IN THE PRINCIPAL AMOUNT
                              OF UP TO $65,000,000
                            SENIOR HOUSING FACILITIES


<PAGE>


                                TABLE OF CONTENTS

ARTICLE  I.  The  Loan     2
----------------------
ARTICLE  II.  Security     7
----------------------
ARTICLE  III.  Conditions  Precedent     8
------------------------------------
ARTICLE  IV.  Representations  and  Warranties     11
----------------------------------------------
ARTICLE  V.  Affirmative  Covenants     16
-----------------------------------
ARTICLE  VI.  Negative  Covenants     20
---------------------------------
ARTICLE  VII. Events of Default; Acceleration of Indebtedness; Remedies     21
-----------------------------------------------------------------------
ARTICLE  VIII.  Miscellaneous     23
-----------------------------

                         LIST OF EXHIBITS AND SCHEDULES
Exhibits  A-1  to  A-11          Property  Description
Exhibit  B               Litigation
Exhibit  C               Security  Deposits
Exhibit  D               Principal  Payments
Exhibit  E               Borrower's  Addresses

Schedule  I               Index  of  Defined  Terms

Rider                    Senior  Housing  Rider


<PAGE>


                                                             Loan No. 07-0004024

                                 LOAN AGREEMENT

     This  LOAN  AGREEMENT  (this "AGREEMENT") is made this 6th day of December,
2002 by and between GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation
("LENDER"),  and  EMERITUS  REALTY  II,  LLC; EMERITUS REALTY III, LLC; EMERITUS
REALTY  V,  LLC;  EMERITUS  REALTY  VII, LLC; EMERITUS REALTY XIV, LLC; EMERITUS
REALTY  BOZEMAN, LLC; and EMERITUS REALTY PUYALLUP, LLC; each a Delaware limited
liability  company, and ESC-PORT ST. RICHIE, LLC, a Washington limited liability
company  (each  a  "BORROWER"  and  collectively with certain affiliates of such
parties  which are now or hereafter become parties to this Agreement, "BORROWER"
or  "BORROWERS",  as  the  context  requires).

                                    RECITALS
     A.     Lender  has  agreed  to make a loan (the "LOAN") to Borrowers in the
aggregate  principal  amount  of  up  to  Sixty-Five  Million and No/100 Dollars
($65,000,000.00) 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  Forty-Three  Million  Six  Hundred Ninety-Eight
Thousand  and  No/100 Dollars ($43,698,000.00) made by Borrowers to the order of
Lender  (said  promissory  note  and  all  amendments  thereto and substitutions
therefor  are  hereinafter referred to herein collectively as "NOTE A") and that
certain  Subordinated  Renewal  Promissory  Note  B of even date herewith in the
original  principal  amount of Twenty-One Million Three Hundred Two Thousand and
No/100 Dollars ($21,302,000.00) made by ESC-Port St. Richie, LLC to the order of
Lender  (said  promissory  note  and  all  amendments  thereto and substitutions
therefor  and  as  it may be assumed by any Affiliate of a Borrower or Guarantor
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, Borrowers will be the owners of the real property
more  particularly described on Exhibits A-1 through A-11 attached hereto (each,
                                -------------------------
a  "PROPERTY"  and  collectively,  the  "PROPERTIES"),  and  the assisted living
facility  and/or  other  improvements  located  thereon (collectively called the
"IMPROVEMENTS").  Borrowers  have  entered into a lease (the "OPERATING LEASE"),
leasing  their  respective Property (or Properties) and the Improvements located
thereon  (each, a "PROJECT") with Guarantor and certain entities wholly-owned by
Guarantor,  as  tenants, which tenant entities shall hold the license to operate
the facilities (Guarantor (in its capacity as a tenant under the Operating Lease
and  an  operator of certain Properties) and such wholly-owned entities are each
referred  to  as  an  "OPERATOR"  and  collectively,  as  the "OPERATORS").  The
Properties  and  the  Improvements  are  sometimes  collectively  called  the
"PROJECTS."
C.     Borrowers' obligations under the Loan Documents will be secured by, among
other  things,  (i) the Environmental Indemnity, (ii) a first priority mortgage,
deed  of trust, or document of similar effect of even date herewith, executed by
each  Borrower,  encumbering  each  Project, and a leasehold mortgage, leasehold
deed  of  trust or document of similar effect of even date herewith, executed by
each Operator, encumbering its leasehold interest under the Operating Lease of a
Project  (each  a  "MORTGAGE"  and  collectively,  the  "MORTGAGES"),  (iii)  an
assignment  of  leases  and rents of even date herewith, (each an "ASSIGNMENT OF
LEASES"  and  collectively,  the  "ASSIGNMENTS  OF  LEASES"),  executed  by each
Borrower  and  each  Operator and (iv) the Guaranty.  This Agreement, the Notes,
the  Mortgages,  the  Assignments  of  Leases,  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  Projects.
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.     INITIAL  FUNDING.  On  the  Closing  Date,  Lender  shall disburse to
           ----------------
Borrower from the proceeds of the Loan the sum of Fifty-Eight Million and No/100
     Dollars  ($58,000,000.00)  (the  "INITIAL FUNDING AMOUNT").  "CLOSING DATE"
means  the  date  of  disbursement  of  the  Initial  Funding  Amount.
1.1.2.     EARNOUT  ADVANCES.  Subject  to  the  conditions  set  forth  in this
           -----------------
Section  1.1.2. and the other provisions of this Agreement, Lender shall make up
      --------
to  two  (2)  additional disbursements from the proceeds of the Loan to Borrower
(each  an  "EARNOUT  ADVANCE")  each  in  the  amount  of  $3,500,000.
(a)     Borrower shall submit a written request to Lender for an Earnout Advance
     no  less  than  thirty  (30) days prior to the date of the Earnout Advance;
(b)     No  Earnout  Advance  shall  be  made  after  December  6,  2004;
(c)     No  default  shall  have  occurred  under  any  of  the  Loan Documents;
(d)     Borrower  shall, at Borrower's expense, deliver to Lender a date-down or
such other endorsement to the Title Policy, but only  if required to ensure that
such  Title  Policy  shall  provide  Lender with title insurance for the Earnout
Advance;
(e)     The  aggregate Net Operating Income for the Projects for each of the six
(6) full months immediately preceding the disbursement of the applicable Earnout
Advance shall be greater than or equal to (i) $8,550,000 for disbursement of the
first  Earnout  Advance,  and  (ii)  $9,025,000  for  disbursement of the second
Earnout  Advance;
(f)     The  Debt  Coverage Ratio for each of the twelve (12) months immediately
succeeding  the  disbursement  of the applicable Earnout Advance is projected by
Lender  to  be  greater  than  or  equal  to  1.40:1.00;  and
(g)     the  Earnout  Advance is used to pay down the outstanding balance of the
Mezzanine  Loan (and Lender may elect to pay the Earnout Advance directly to the
Mezzanine  Lender), provided that if the Mezzanine Loan has been fully repaid or
to  the  extent that Mezzanine Lender will not allow prepayment of the Mezzanine
Loan,  the proceeds or remaining proceeds (as applicable) of any Earnout Advance
shall  be  applied  to  the  Loan  in  such  order  as  Lender  shall  elect.
     "DEBT  COVERAGE RATIO" means the ratio of (i) Net Operating Income from the
Projects for a particular period, to (ii) payments of interest and principal due
on  the  Loan  for  the  same  period.
"PROJECT  YIELD"  for  any  period  means  the quotient of (x) the Net Operating
Income  from  the  Projects  for  a  particular  period, 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  (excluding
non-recurring  and non-Project related income) less Expenses, each as determined
                                               ----
by  Lender's  audit  (or otherwise reasonably estimated by Lender) at Borrowers'
expense.  Calculation  of "EFFECTIVE RENTAL INCOME" shall be based on the lesser
of:
(i)     the rent rolls of the Operators of the Projects from the most recent (A)
three  (3)  months  for purposes of Section 1.2.2, Section 2.2, and Section 5.9,
                                    -------------  -----------      -----------
and  (B)  six  (6)  months  for  purposes  of  this  Section 1.1.2, in each case
                                                     -------------
annualized  and  adjusted  for  concessions;  or
(ii)     an  assumed  95%  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, interest income and rent under the
Operating  Lease.  Calculation of "EXPENSES" shall mean (i) for purposes of this
Section  1.1.2,  Section  1.2.2  and Section 2.2, the actual customary operating
--------------   --------------      -----------
expenses of the Projects, 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 a Borrower or an Operator, as
applicable,  and a replacement reserve in an amount equal to Three Hundred Sixty
and  No/100 Dollars ($360.00) per unit and (ii) for purposes of Section 5.9, the
                                                                -----------
actual  customary  operating  expenses  of the Projects, 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 a Borrower or an Operator, as applicable,
and  a  replacement reserve in an amount equal to Three Hundred Sixty and No/100
Dollars  ($360.00) per unit.  Expenses shall not include any rent paid under the
Operating  Lease.
1.2.     LOAN  TERM.
         ----------
1.2.1.     MATURITY  DATE.  The  Loan  shall mature on December [5], 2006 or any
           --------------
earlier  date on which the Loan shall be required to be paid in full, whether by
acceleration  or  otherwise  (the  "MATURITY  DATE").
1.2.2.     EXTENSION OPTION.  Borrower may extend the Maturity Date to September
           ----------------
[5],  2007  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 one-half percent (0.5%) of the outstanding balance of the
Loan  on the date of delivery of the Extension Notice; (c) no default shall have
occurred  under the terms of any of the Loan Documents; (d) the Project Yield is
not less than 13.87% for each of the three (3) full months immediately preceding
the  Maturity  Date;  and  (e) the Debt Coverage Ratio for each of the three (3)
full  months immediately preceding the Maturity Date is not less than 1.40:1.00.
1.3.     INTEREST  RATE.  Borrower  shall  pay  interest  on  the  outstanding
         --------------
principal  balance  of  the  Loan at a floating rate per annum equal to the Base
Rate  plus four and fifteen hundredths percent (4.15%); provided, however, in no
event shall the interest rate be less than six and one-half percent (6.50%) (the
     greater  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 December 31, 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 January 1,
2003  computed  on the outstanding principal balance of the Loan at the Interest
Rate.
1.4.2.     PRINCIPAL  PAYMENTS.  Commencing  on  January  1, 2003 and continuing
           -------------------
through  the earlier of (a) disbursement of the first Earnout Advance or (b) the
Repayment  Date,  Borrower  shall  make  a principal amortization payment on the
first  (1st)  day of each month in the amount set forth on the schedule attached
hereto  as  Exhibit  D.  Upon  disbursement of the first Earnout Advance, Lender
            ----------
shall  provide  Borrower with a new amortization schedule, and commencing on the
first  (1st)  day  of  the  first  (1st)  month  after  such Earnout Advance and
continuing through the earlier of (i) the Repayment Date or (ii) disbursement of
the second Earnout Advance, Borrower shall make a principal amortization payment
on  the  first  (1st)  day  of  each  month  in the amount set forth on such new
amortization  schedule.  Upon disbursement of the second Earnout Advance, Lender
shall  provide  Borrower with a new amortization schedule, and commencing on the
first  (1st) day of the first (1st) month after the second (2nd) Earnout Advance
and  continuing  through  the  Repayment  Date,  Borrower shall make a principal
amortization  payment  on  the  first  (1st) day of each month in the amount set
forth  on  such  new  amortization  schedule.
     Each  new  amortization schedule shall be prepared by Lender based upon the
then  outstanding principal balance of the Loan (taking into account the Earnout
Advance  being made) and using the remainder of the twenty-five (25)-year period
commencing  on  [THE  CLOSING  DATE]  and  an  annual interest rate of seven (7)
percent.
"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:
                                SOURCES     USES
                                -------     ----
Initial  Funding  Amount     $  58,000,000     Payoff  of  Existing  Debt
$72,850,000
Mezzanine  Loan     $  16,000,000     Lender  Fee     $650,000
Borrower's  Equity     $  500,000     Lender  Closing  Costs     $350,000
Available  Earnout  Advance     $  7,000,000     Borrower  Closing  Costs
$650,000
          Available  Earnout  Advance     $7,000,000

Total:     $81,500,000     Total:     $81,500,000
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.  Other than the principal payments required under
         --------------------
Sections  1.1.3(g),  1.4.2  and  2.2,  Borrower  may  not prepay the outstanding
------------------------------------
principal  balance  of  the Loan in full or in part prior to December [6], 2004.
------
Thereafter, 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).
                            PERIOD IN WHICH PRINCIPAL
                 BALANCEOF LOAN BEING REPAID OCCURS     EXIT FEE
                 ----------------------------------     --------
On  or  prior  to December [5], 2004     The Loan may not be voluntarily prepaid
prior  to  December  [6],  2004,  other  than  principal payments required under
Section  1.4.2.  In the event the Loan is repaid for any reason, including if it
is  accelerated  by Lender, prior to December [6], 2004, an Exit Fee will be due
equal  to  the  sum  of (a) the interest that would have come due and payable by
Borrower  from and after the date of repayment through December [6], 2004 at the
Interest  Rate  (as  reasonably  estimated  by  Lender),  and  (b)  $650,000
                 December [6], 2004 and thereafter     $650,000

1.9.     CAPITAL  ADEQUACY;  INCREASED  COSTS;  ILLEGALITY.
         -------------------------------------------------
(a)     If  Lender  determines  that  any  law,  treaty,  governmental  (or
quasi-governmental)  rule,  regulation,  guideline  or  order  regarding capital
adequacy,  reserve  requirements or similar requirements or compliance by Lender
with  any  request or directive regarding capital adequacy, reserve requirements
or  similar requirements (whether or not having the force of law), in each case,
adopted  after  the  Closing  Date,  from any central bank or other governmental
authority  increases  or  would  have  the  effect  of  increasing the amount of
capital, reserves or other funds required to be maintained by Lender and thereby
     reducing  the  rate  of  return  on  the Loan made by Lender hereunder as a
consequence  of  its  obligations  hereunder  to a level below that which Lender
would  have achieved but for such adoption, change or compliance, then Borrowers
shall  from time to time upon fifteen (15) days prior notice from Lender, pay to
Lender additional amounts sufficient to compensate Lender for such reduction.  A
certificate  as  to  the  amount  of that reduction and showing the basis of the
computation  thereof  submitted  by  Lender  to Borrowers shall, absent manifest
error,  be  final,  conclusive  and  binding  for  all  purposes.
(b)     If,  due  to  either (i) the introduction of or any change in any law or
regulation  (or any change in the interpretation thereof) or (ii) the compliance
with  any  guideline  or  request  from  any  central bank or other governmental
authority  (whether  or not having the force of law), in each case adopted after
the  Closing  Date,  there  shall  be  any  increase  in  the  cost to Lender of
maintaining  the  Loan  (other  than  an  increase in cost solely as a result of
income  or franchise taxes payable by Lender), then Borrowers shall from time to
time,  upon  demand  by  Lender,  pay to Lender additional amounts sufficient to
compensate  Lender  for  such increased cost.  A certificate as to the amount of
such  increased  cost, submitted to Borrowers by Lender, shall be conclusive and
binding  on  Borrowers  for  all purposes, absent manifest error.  Lender agrees
that,  as  promptly  as  practicable after it becomes aware of any circumstances
referred  to  above which would result in any such increased cost, Lender shall,
to  the  extent not inconsistent with such Lender's internal policies of general
application,  use  reasonable  commercial efforts to minimize costs and expenses
incurred  by  it and payable to it by Borrowers pursuant to this Section 1.9(b).
                                                                 --------------
(c)     Notwithstanding  anything  to  the  contrary  contained  herein,  if the
introduction  of  or  any  change in any law or regulation (or any change in the
interpretation  thereof)  shall  make  it unlawful, or any central bank or other
governmental  authority shall assert that it is unlawful, for Lender to agree to
make  or  to  make  or to continue to fund or maintain any Loan bearing interest
computed  by  reference  to  LIBOR,  then,  unless  Lender is able to make or to
continue  to  fund or to maintain the Loan at another branch or office of Lender
without,  in  Lender's opinion, adversely affecting it or its Loan or the income
obtained  therefrom,  on  notice  thereof  and  demand  therefor  by  Lender  to
Borrowers,  (i)  the  obligation  of  Lender  to  agree to make or to make or to
continue  to  fund or maintain the Loan shall terminate and (ii) Borrowers shall
forthwith  prepay  in  full  the  Loan,  together  with interest accrued thereon
without  penalty  or  any  Exit  Fee.
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  the  Stanford Project and/or the
Concorde  Project,  as  applicable, and such Project or Projects, as applicable,
shall  not be included in the Projects for any period thereafter for purposes of
the  Loan  Documents,  provided that (a) Borrower pays or reimburses Lender, for
all reasonable costs incurred in connection with the release of any such Project
or  Projects;  (b)  no  default  has occurred under any of the terms of the Loan
Documents; (c) the Projects shall have a Project Yield for each of the three (3)
full  months immediately preceding the proposed release of greater than or equal
to  13.5%; (d) the applicable Project is (or Projects are) sold to a third party
in  an  arm's  length  transaction  for  not  less than (i) $2,925,000 as to the
Stanford  Project or (ii) $2,575,000 for the Concorde Project; and (e) the first
$5,500,000  of net sale proceeds are used to pay down the outstanding balance of
the  Loan  and  the  remaining  net  sale  proceeds  are  used  to  pay down the
outstanding  balance  of the Mezzanine Loan, provided that if the Mezzanine Loan
has  been  fully  repaid  or  to the extent that Mezzanine Lender will not allow
prepayment  of  the  Mezzanine  Loan,  the remaining net sales proceeds shall be
applied  to  the  Loan in such order as Lender elects.  Upon satisfaction of all
conditions  of  this Section 2.2 for release of the last of the Stanford Project
                     -----------
or the Concorde Project, the Borrower owning such Project 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.
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)     an  authorization  to  file Uniform Commercial Code financing statements
from  each  Borrower;
(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  each  Borrower,  each  Operator  and  Guarantor;
(i)     an  assignment  of  management  contract,  subordination and recognition
agreement,  including  a  waiver  of  property  management  and  broker's liens,
executed  by each Operator and Guarantor relating to the Management Contract (as
hereinafter  defined);  and
(j)     an  Intercreditor  and Subordination Agreement by and between Lender and
Mezzanine  Lender,  in  form  and  substance  reasonably  acceptable  to Lender,
executed  by  Mezzanine  Lender.
3.2.     BORROWER'S  EQUITY.  On  or  prior  to the Closing Date, Borrower shall
         ------------------
have  invested  cash  equity in the Project in an aggregate amount not less than
Five  Hundred  Thousand  and No/100 Dollars ($500,000.00) ("BORROWER'S EQUITY").
3.3.     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 Project (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 Project and the corresponding
leasehold  estate,  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).
3.4.     SURVEY.  Lender  shall  have  received  and  approved  a survey of each
         ------
Property,  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 a survey 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.
3.5.     ENVIRONMENTAL  REPORT.  Lender  shall  have  received  a  Phase  I
         ---------------------
Environmental  audit  of  the  Projects.  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.
3.6.     LEASES.  All  leases,  licenses and other agreements with regard to the
         ------
occupancy  of  the  Projects, including patient and resident care agreements and
service  agreements which include an occupancy agreement, including the Operator
Leases  ("LEASES"),  shall  be  in  form  and substance reasonably acceptable to
Lender; provided Borrowers need not seek Lender's approval for any new Qualified
Non-Residential  Lease  entered  into  hereafter.  Borrowers  shall  cause  each
Operator to submit for Lender's approval a copy of the form of residential Lease
each  Operator proposes to utilize at its Project(s), 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 any Project; provided, however, Lender's approval shall
not  be  required  for  (but  the applicable Borrower shall cause the applicable
Operator  to  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 Guarantor or any of
its  or  any  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 the applicable Project in any one (1)
year  period  (a  "QUALIFIED  NON-RESIDENTIAL  LEASE").  On  the  Closing  Date,
Borrowers  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
Borrowers shall submit a revised and recertified rent roll for the Projects.  If
any  non-residential  leases, other than Qualified Non-Residential Leases, exist
or  are  hereafter  entered  into  with  respect  to  any  Project,  each tenant
thereunder  shall execute and deliver to Lender prior to the Closing or prior to
execution  thereof  by a Borrower or an Operator, as applicable, a Subordination
and Attornment Agreement in a form acceptable to Lender, if requested by Lender.
3.7.     INSURANCE.  Borrowers  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.
3.8.     COMPLIANCE  WITH LAWS.  Borrowers shall have submitted and Lender shall
         ---------------------
have  approved (a) a final certificate of occupancy (or the equivalent) for each
Project,  and  (b) evidence satisfactory to Lender that each Project 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.
3.9.     COMMITMENT  FEE.  Borrowers  shall have paid Lender a commitment fee in
         ---------------
the  amount of Six Hundred Fifty Thousand and No/100 Dollars ($650,000.00) 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.
3.10.     INTENTIONALLY  OMITTED.
          ----------------------
3.11.     MANAGEMENT  CONTRACT.  Lender  shall  have  approved  the  management
          --------------------
contract (each, a "MANAGEMENT CONTRACT") between Guarantor and each Operator for
each  of  the Projects, none of which shall provide for a management fee (by any
name)  to  exceed  five  percent  (5%)  of  the  gross revenues of such Project.
3.12.     MEZZANINE  LOAN.  Lender shall have approved the terms of that certain
          ---------------
loan  (the "MEZZANINE LOAN") in the amount of Sixteen Million and No/100 Dollars
($16,000,000.00)  to be made by Health Care Property Investors, Inc. ("MEZZANINE
LENDER") to Emeritus Realty Corporation, a Nevada corporation and a wholly owned
subsidiary  of  Guarantor  ("MEZZANINE  BORROWER"),  and shall have approved the
documents  evidencing,  securing  or  otherwise pertaining to the Mezzanine Loan
executed  by  Mezzanine  Borrower,  Guarantor,  Borrowers  or  their  respective
Affiliates (the "MEZZANINE LOAN DOCUMENTS").  The proceeds of the Mezzanine Loan
shall  be  used  to fund Mezzanine Borrower's capital contribution to Borrowers.
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, each 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 other than ESC-Port St. Richie, LLC
         -------------------
is  a  limited  liability  company  duly  formed,  validly  existing and in good
standing  under  the  laws  of the State of Delaware with its principal place of
business as shown on Exhibit E.  ESC-Port St. Richie, LLC 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 as shown on
Exhibit E.  Each Borrower is qualified to transact business and in good standing
    -----
under  the  laws  of  the state (or states) where its Property is (or Properties
are)  located.  Each  Operator is a limited liability company or corporation, as
applicable, duly formed, validly existing and in good standing under the laws of
the State of Washington.  Each Operator is qualified to transact business and in
good  standing under the laws of the state (or states) where its Property is (or
Properties  are)  located.  The  Loan  Documents have each been duly authorized,
executed  and  delivered  and  each  constitutes  the duly authorized, valid and
legally binding obligation of each Borrower, each Operator and Guarantor, as the
case  may be, enforceable against each Borrower, each Operator 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.  Prior  to  the  joinder  hereto of a Borrower, or the joinder of an
Operator to any of the other Loan Documents, Borrowers shall provide Lender with
evidence  reasonably  satisfactory  to Lender that such Borrower or Operator, as
applicable,  is  an entity duly formed, validly existing and in good standing in
its state of formation, and in good standing and authorized to transact business
in  the  state  in  which  its  Property  is  (or  Properties  are)  located.
4.2.     OWNERSHIP  OF  BORROWERS  AND  OPERATORS.
         ----------------------------------------
4.2.1.     OWNERSHIP  OF  BORROWER.  Mezzanine Borrower owns one hundred percent
           -----------------------
(100%) of the membership interests in each Borrower free and clear of all liens,
     claims,  encumbrances  and  rights  of  others,  except  as provided in the
Mezzanine  Loan  Documents.  Mezzanine  Borrower  has  collaterally assigned the
ownership  interests  in each Borrower to Mezzanine Lender pursuant to the terms
of  the  Mezzanine  Loan  Documents.
4.2.2.     OWNERSHIP OF OPERATORS.  Guarantor owns one hundred percent (100%) of
           ----------------------
the  ownership  interest  in each Operator and one hundred percent (100%) of the
ownership  interest  in  Mezzanine Borrower free and clear of all liens, claims,
encumbrances  and  rights  of  others.
4.3.     OPERATING  AGREEMENT.  A  true  and  complete  copy  of  the  operating
         --------------------
agreement  and  certificate  of formation creating each Borrower and any and all
amendments  thereto (collectively, the "BORROWER OPERATING AGREEMENT") have been
forwarded to Lender (or, with respect to a Borrower joined hereto or thereto, or
     an  Operator joined to any other Loan Document, will be furnished to Lender
prior  to  the joinder hereto of such Borrower or Operator, as applicable).  The
Borrower  Operating Agreement constitutes the entire agreement among the members
of  each  Borrower  and is binding upon and enforceable against such members, 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,  among  the members relating to the ownership or
management  of the corporate business affairs of any Borrower.  No breach exists
under  the  Borrower Operating Agreement and no condition exists which, with the
giving of notice or passage of time would constitute a breach under the Borrower
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 each Borrower's knowledge, violate
any provisions of law or any applicable regulation, order or other decree of any
court  or  governmental entity by which any Borrower or any Project, or any part
thereof,  is  bound  or  affected,  or (ii) conflict or be inconsistent with, or
result  in  any  default  under,  any contract, agreement or commitment to which
Borrower  is  bound.  Each  Borrower  has  delivered  to  Lender  copies  of any
agreements  (including  leases)  between  such Borrower and any Affiliate of any
Borrower  or  Guarantor,  related in any way to any Project or any part thereof,
and any other agreements or documents materially affecting the use and operation
of  any  Project  or  any  part  thereof.
4.5.     INTENTIONALLY  OMITTED.
         ----------------------
4.6.     INTENTIONALLY  OMITTED.
         ----------------------
4.7.     INTENTIONALLY  OMITTED.
         ----------------------
4.8.     INTENTIONALLY  OMITTED.
         ----------------------
4.9.     INTENTIONALLY  OMITTED.
         ----------------------
4.10.     EXISTENCE  OF MEZZANINE BORROWER.  Mezzanine Borrower is a corporation
          --------------------------------
duly  incorporated  validity existing and in good standing under the laws of the
State  of  Nevada,  with its principal place of business at 3131 Elliott Avenue,
Suite  500A,  Seattle,  Washington  98121.
4.11.     MEZZANINE  BORROWER  DOCUMENTS.  A  true  and  complete  copy  of  the
          ------------------------------
articles  of  incorporation  and  by-laws  of  Mezzanine  Borrower and all other
documents  creating  and  governing  Mezzanine  Borrower  (collectively,  the
"MEZZANINE  BORROWER  DOCUMENTS")  have  been furnished to Lender.  There are no
other  agreements,  oral  or written, among any of the shareholders of Mezzanine
Borrower  relating to Mezzanine Borrower.  The Mezzanine Borrower Documents were
duly  executed and delivered, are in full force and effect, and binding upon and
enforceable  in  accordance  with their terms.  The Mezzanine Borrower Documents
constitute  the  entire  understanding  among  the  shareholders  of  Mezzanine
Borrower.  No  breach  exists  under the Mezzanine Borrower 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  Mezzanine  Borrower
Documents.
4.12.     MEZZANINE  BORROWER'S  OTHER AGREEMENTS.  Mezzanine Borrower is not 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 each Borrower's
knowledge,  violate any provisions of law or any applicable regulation, order or
other  decree  of  any  court  or  governmental  entity  by which Mezzanine Loan
Borrower  or  any  Project,  or  any part thereof, is bound or affected, or (ii)
conflict  or be inconsistent with, or result in any default under, any contract,
agreement  or  commitment  to which Mezzanine Loan Borrower is bound.  Borrowers
have  delivered  to  Lender  copies of any agreements (including leases) between
Mezzanine  Loan  Borrower  and  any  Affiliate  of  Mezzanine  Loan  Borrower or
Guarantor,  related in any way to any Project or any part thereof, and any other
agreements  or  documents  materially  affecting  the  use  and operation of any
Project  or  any  part  thereof.
4.13.     THE PROPERTY.  Fee simple title to each Property is, or on the Closing
          ------------
Date,  will  be,  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 each Borrower's knowledge, each
Property  and the Improvements located thereon 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  the  applicable  Property.  To  the best of each Borrower's
knowledge,  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 its
Projects,  or  any  part  thereof.
4.14.     PROPERTY  ACCESS.  Each  Property is accessible through fully improved
          ----------------
and  dedicated  roads  accepted  for  maintenance  and  public use by the public
authority  having  jurisdiction.
4.15.     UTILITIES.  All  utility services necessary and sufficient for the use
          ---------
or  operation  of  each  Project  are available including water, storm, sanitary
sewer,  gas,  electric  and  telephone  facilities.
4.16.     FLOOD  HAZARDS/WETLANDS.  No  Property, other than the Spring Property
          -----------------------
(as  defined  on  Exhibit  A-10  (an unimproved portion of which is located in a
                  -------------
100-year flood plain), 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.
4.17.     TAXES/ASSESSMENTS.  There  are no unpaid or outstanding real estate or
          -----------------
other taxes or assessments on or against any Project 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 Project have been delivered to
Lender.  Said  bills  cover each entire Project and do not cover or apply to any
other  property.  No Borrower has received notice of any pending or contemplated
action  pursuant  to  which  any  special  assessment  may be levied against any
portion  of  any  Project.
4.18.     EMINENT DOMAIN.  No Borrower has received notice of any eminent domain
          --------------
or  condemnation  proceeding  pending and to each Borrower's knowledge there are
none  threatened,  relating  to  any  part  of  any  Project.
4.19.     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 each Borrower's knowledge, threatened against or
relating  to  Guarantor,  any  Borrower,  any Operator or any of their property,
assets,  or  business,  including the Projects, which if decided adversely would
affect  the  business,  affairs,  assets or financial condition of any Borrower,
Guarantor,  any  Project  or  the  prospects  for  repayment  of  the  Loan.
4.20.     ACCURACY.  Neither  this  Agreement  nor  any  document,  financial
          --------
statement,  credit  information, certificate or statement furnished to Lender by
any  Borrower  or  Guarantor  or  Operator  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.
4.21.     FOREIGN OWNERSHIP.  No Borrower, Operator nor Guarantor is or will be,
          -----------------
and no legal or beneficial interest of a partner of a Borrower or Operator 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.
4.22.     SOLVENCY.  No  Borrower, Operator 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.
4.23.     FINANCIAL  STATEMENT/NO  CHANGE.  Borrowers,  Operators  and Guarantor
          -------------------------------
have  heretofore  delivered  to  Lender  copies  of  the  most current financial
statements  of  each  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 each Borrower,
Operator and Guarantor as of the dates in question and the results of operations
for the periods indicated.  No Borrower, Operator nor Guarantor has any material
contingent  liabilities  not  provided  for  or  disclosed  in  said  financial
statements. There has been no material adverse change since November 4, 2002, in
the structure, business, operations, credit, prospects or financial condition of
any  Borrower,  any  Operator,  the  Guarantor  or  any  Project.
4.24.     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 its Property (or Properties) and the
Improvements  located thereon; (ii) is a shareholder or partner or member of any
other  entity;  or  (iii)  conducts  any  business  other  than  the  ownership,
management  and  operation  of  its  Project(s).
4.25.     NO  BROKER.  No  brokerage  commission or finder's fee is owing to any
          ----------
broker  or  finder  arising  out  of  any actions or activity of any Borrower in
connection  with  the  Loan.
4.26.     SECURITY  DEPOSITS.  As  of the date hereof, no Borrower, Operator nor
          ------------------
Guarantor  has  collected  or  is  in  receipt  of any security deposit from any
resident  of  any  Project,  except  as  described  on  Exhibit  C.
                                                        ----------
4.27.     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,  (i)  as of the date hereof, each Borrower, each Operator and each
Project  and,  to  each  Borrower's  knowledge,  each  of  any  Borrower's,  any
Operator's  or  Guarantor's  licensed  employees  and  contractors  (other  than
contracted agencies) in the exercise of their respective duties on behalf of any
Borrower,  any  Operator  or  Guarantor  (with  respect  to its operation of the
Projects)  or  any portion of the Projects, 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"));  and  (ii)  at  all times that the Loan is
outstanding,  Borrower  shall  and  shall  cause each Operator, Guarantor, their
respective  employees and all Projects to comply with all Healthcare Laws.  Each
Borrower  has  maintained  and/or  has  caused  each  Operator,  to maintain, as
applicable,  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 any Borrower, there are no presently existing circumstances
which  would  result  or  likely  would  result  in  material  violations of the
Healthcare  Laws.  Each Borrower has and/or has caused Operator and its or their
respective  Affiliates,  as  applicable,  to  have  such  permits,  licenses,
franchises,  certificates  and other approvals or authorizations of governmental
or regulatory authorities as are necessary under applicable law to own or lease,
as  applicable,  their  respective  Projects  and  to  conduct  their respective
business  in  connection  with  the  Projects (including without limitation such
permits  as  are  required  under  such  the  Healthcare  Laws).
(b)     To  the  extent  that  and  for so long as (i) any Borrower, Operator or
Guarantor  is  a  "covered  entity"  within  the  meaning  of  HIPAA or (ii) any
Borrower,  Operator or Guarantor (with respect to its operation of the Projects)
and/or  their  respective business and operations (with respect to the Projects)
are  subject  to  or  covered  by  the so-called "Administrative Simplification"
provisions  of  HIPAA, Borrower has or shall (if such entity is Borrower) or has
caused  or shall cause such entity to, as applicable (x) undertaken/undertake or
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 such entity to be HIPAA Compliant (as defined below);
(y)  developed/develop  or  promptly  develop  a detailed plan and time line for
becoming  HIPAA  Compliant  (a  "HIPAA  COMPLIANCE  PLAN");  and  (z)
implemented/implement  or  implement  those  provisions of such HIPAA Compliance
Plan in all material respects necessary to ensure that such entity is or becomes
HIPAA  Compliant.   For  purposes hereof, "HIPAA COMPLIANT" shall mean that each
Borrower,  each  Operator  and  Guarantor,  as  applicable, (1) 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 (2) 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 any Borrower's, any Operator's or
Guarantor's  business, operations, assets, properties or condition (financial or
otherwise),  in  connection  with  any actual or potential violation by any such
entity  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 Projects at all reasonable times upon reasonable notice given orally
     or  in  writing to the applicable Borrower.  Lender, at Borrowers' expense,
may  retain  one  or  more  independent  consultants to periodically inspect the
Projects  and  all documents, drawings, plans, and consultants' reports relating
thereto.  During  the  term  of  the  Loan,  Borrowers  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  Fifty  and No/100 Dollars ($250.00) per
Property,  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, Borrowers shall not be obligated
to  pay  Lender  an  amount  greater  than  Three  Thousand  and  No/100 Dollars
($3,000.00)  per  calendar  year  per  Property with respect to such inspections
after  the  Closing  Date.  Nothing  contained  in this Section 5.1. shall limit
                                                        ------------
Borrowers'  obligations  with  respect  to inspections performed pursuant to the
terms  of  the  Environmental Indemnity, including without limitation Borrowers'
obligation  to  pay  for,  perform  or  caused to be performed such inspections.
5.2.     BOOKS  AND  RECORDS/AUDITS.  Each  Borrower  shall and shall cause each
         --------------------------
Operator  to keep and maintain at all times at such Borrower's or Operator's, as
applicable,  address  stated  below, or at its respective Project, 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 its respective
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  its  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  any  Borrower's  or  any  Operator's records and
computations.  The costs and expenses of the audit shall be paid by Borrowers if
the  audit  discloses  a  monetary  variance  in  any  financial  information or
computation  of  the  aggregate  income  or expense 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 any
Borrower  or  any  Operator; provided, however, if a default has occurred and is
continuing,  Borrowers shall pay the costs and expenses of such audit regardless
of  any  variance  disclosed.
5.3.     FINANCIAL  STATEMENTS;  BALANCE SHEETS.  Each Borrower shall furnish to
         --------------------------------------
Lender  and  shall  cause  each Operator and 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 each Borrower, each Operator 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 and
each  Operator  to  furnish  to  Lender  the  following  statements:
5.3.1.     MONTHLY AND ANNUAL OPERATING STATEMENTS.  Statements of the operation
           ---------------------------------------
     of  each  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 the applicable Borrower as
true,  correct,  and  complete,  and  yearly  statements of the operation of its
Project,  to  be delivered within one hundred twenty (120) days after the end of
each  fiscal year and certified by the applicable Borrower as true, correct, and
complete.
5.3.2.     ANNUAL  BALANCE  SHEETS  AND  FINANCIAL  STATEMENTS.  Annual  balance
           ---------------------------------------------------
sheets  and financial statements from each Borrower and each Operator 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  any Borrower, any Operator or Guarantor 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 such Borrower (or if Guarantor is not then a publicly held
company,  Guarantor) which in any way pertain to the Projects and to prepare the
statement  or statements which any Borrower, any Operator 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.  Borrowers  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.  Borrowers  shall  use  the proceeds of the Loan for
         -----------------
proper  business purposes.  No portion of the proceeds of the Loan shall be used
by  Borrowers in any manner that might cause the borrowing or the application of
such proceeds to violate 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.  Each Borrower shall promptly provide
         --------------------------------
Lender  with:
(a)     written  notice  of  any litigation, arbitration, or other proceeding or
governmental  investigation  pending or, to any Borrower's knowledge, threatened
against  or  relating  to  any Borrower, any Operator or any Project or any part
thereof;
(b)     written  notice  of  any  material  litigation,  arbitration,  or  other
proceeding  or  governmental  investigation  pending  or,  to  any  Borrower'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 a Borrower, an Operator or Guarantor
relating  to  any Borrower, any Operator, the Collateral, or the Projects or any
part  thereof;
(d)     a  copy  of  all notices sent to or received from Guarantor under any of
the  Management  Contracts;
(e)     a copy of all notices sent to or received from any Operator or Guarantor
under  the  Operating  Lease;  and
(f)     a  copy of all notices sent to Mezzanine Lender or received by Mezzanine
Borrower,  any  Borrower  or  Guarantor  under  the  Mezzanine  Loan  Documents.
5.6.     AFFILIATE  TRANSACTIONS.  Prior  to entering into any agreement with an
         -----------------------
Affiliate  pertaining  to a Project or any part thereof, Borrowers 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 any Borrower, any Operator or Guarantor, or any
officer,  director,  partner  or  shareholder  of  any Borrower, any Operator or
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.  Each  Borrower  agrees  to allow Lender to advertise in
         -------------
the  various  news  or  financial  media  that  Lender has provided financing to
Borrowers.
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,
Borrowers  shall  pay  to  Lender  an  amount equal to Thirty and No/100 Dollars
($30.00)  per unit in the Projects (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 any Borrower.  So long as
no  default  exists  hereunder  or under any of the other Loan Documents, Lender
shall  credit  for  Borrowers'  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 Borrowers.  So long as there is no Event of Default,
Borrowers  may  request  Lender  to  disburse funds from the Replacement Reserve
(which  request  will  include  a reasonably detailed description of the capital
expenditures  at a Project which a 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  the  Closing Date and continuing
         --------------------
through  May  31,  2004,  (a) the Project Yield for the Projects for each of the
trailing three (3) months shall be greater than or equal to twelve percent (12%)
and  (b) the Debt Coverage Ratio for the Projects for each of the trailing three
(3)  months  shall be greater than or equal to 1.25:1.00.  Commencing on June 1,
2004  and  continuing  through  the  Maturity  Date,  as it may be extended, the
Project  Yield  for the Projects for each of the trailing three (3) months shall
be  greater  than  or  equal to thirteen percent (13%) and (b) the Debt Coverage
Ratio  for  the  Projects  for  each  of  the trailing three (3) months shall be
greater  than  or  equal  to  1.35:1.00.  For  purposes  of  this  Section  5.9,
calculation of Net Operating Income shall be based on an Effective Rental Income
determined  using  actual  occupancy.
ARTICLE  VI.
NEGATIVE  COVENANTS
-------------------
6.1.     NO  AMENDMENTS.  Borrower  shall  not  amend,  modify  or terminate, or
         --------------
permit  the  amendment,  modification  or  termination  of:
(a)     Any  Borrower  Operating  Agreement;
(b)     the  Operating  Lease;  or
(c)     the  Mezzanine  Borrower  Documents.
6.2.     NO  ADDITIONAL  INDEBTEDNESS.  No  Borrower  or Operator 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
Guarantor  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)  as to each Operator, 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 Project (as
defined  on  Exhibit  A-6),  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 other Project.
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  (c)  above.  The  limitation  of  the  indebtedness  of Guarantor as the
Operator  of the Fulton Villa Project (as defined on Exhibit A-1 ) and the Villa
Del  Rey  Project (as defined on Exhibit A-2)) imposed by this Section 6.2 shall
                                                               -----------
apply  only  to  indebtedness incurred in connection with or relating to each of
the  Fulton  Villa  Project  and  the  Villa  Del  Rey  Project.
6.3.     NO  COMMINGLING FUNDS.  No Borrower shall, or shall permit any Operator
         ---------------------
to,  commingle the funds related to a Project with funds from any other property
or  venture, except other Projects.  The prohibition of commingling of the funds
of  Guarantor  as the Operator of the Fulton Villa Project and the Villa Del Rey
Project  shall  apply only to the funds of Guarantor derived from or relating to
such  Projects.
6.4.     PROPERTY  MANAGER.  No  Borrower or Operator shall change or permit the
         -----------------
change  in  Guarantor's  status as manager of the Projects or amend or terminate
any  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 any
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 Project not estimated to have an aggregate cost in
excess of (i) One Hundred Thousand and No/100 Dollars ($100,000.00) with respect
to  the  La  Casa  Project,  or  (ii)  Seventy-Five  Thousand and No/100 Dollars
($75,000.00)  with  respect  to  each  other  Project.
6.6.     CONVERSION.  No  Borrower  shall,  nor  shall  any Borrower permit, its
         ----------
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, no Borrower or
         ----------------
Operator  shall  permit changes in the use of any part of a Project from the use
existing  at  the  Closing Date or other uses reasonably incidental thereto.  No
Borrower  shall initiate or acquiesce in a change in the plat of subdivision, or
zoning  classification  of  its 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  Borrowers to pay, within ten (10) days of the due date, any
of  the  payment  obligations of Borrowers to Lender ("INDEBTEDNESS"), including
any  payment due under the Notes, this Agreement or the other Loan Documents; or
(b)     Failure  of  any  Borrower  to  strictly  comply  with the provisions of
Section  4.24  (single  asset  entity)  or  5.1  (inspection)  or 5.9 (financial
      -------                               ---                   ---
covenants);  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  Borrowers  diligently pursue the curing
thereof  (and then in all events cures such failure within sixty (60) days after
the  original  notice  thereof), Borrowers 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 any Borrower, any Operator
or  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 portion of any Project is appointed, or
any  Borrower,  any Operator or 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  portion  of  any  Project;  or
(e)     The  occurrence  of  a  default  and  the  expiration of any cure period
applicable  thereto  under  any  other  Loan  Document;  or
(f)     Any Operator (other than Guarantor) or any 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 any
Borrower,  any  Operator or Guarantor is not materially true and complete at any
time;  or
(h)     The  occurrence  of  a  default  under  any  Management  Contract  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  any  Borrower,  any  Operator  or  Guarantor;  or
(j)     A  default  under  the  Operating  Lease  which  continues  beyond  the
expiration  of  any  applicable  cure  period  thereunder;  or
(k)     Mezzanine  Borrower  acquires  or  owns  any  property  other  than  its
interests  in  the  Borrowers, its interest in ESC-Land, LLC, a Delaware limited
liability  company,  and  cash  in  its  bank  accounts;  or
(l)     Guarantor  shall  default in the payment of any indebtedness (other than
the  Indebtedness)  related  to  the  Fulton  Villa Project or the Villa Del Rey
Project  and  such default is declared and is not cured within the time, if any,
specified  therefor  in  any  agreement  governing  the  same
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  Borrowers 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.  Borrowers 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  Projects,  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  Projects or any part thereof the true condition of the title to, or the
value  of,  the  Projects  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 any Project or any part thereof)
any  and all information which Lender may have with respect to the Projects, any
Borrower, any Operator or Guarantor or any of their Affiliates, whether provided
by a Borrower, an Operator, Guarantor or any third party or obtained as a result
of  any environmental assessments.  Lender shall have no liability whatsoever as
a result of delivering any such information to any third party, and by executing
this Agreement and/or the Senior Housing Rider, each Borrower, each Operator 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 any
         --------------
Borrower,  Operator or 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 a Borrower's, an Operator'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 applicable Project
is  located  shall  be applicable to the creation, perfection and enforcement of
the  lien  created  by  the Mortgages and Assignments of Leases relating to such
Project.  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 Borrowers 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.  Borrowers shall, jointly and severally, 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  Projects,  (b) the
Collateral,  (c) any act or omission of any Borrower, any Operator or Guarantor,
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,  Borrowers  will undertake, at their 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 Borrowers' expense, prosecute or
defend  any  action involving the priority, validity or enforceability of any of
the  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.
     Attn:  Raymond  R.  Brandstrom,  CFO
     Facsimile  No.  (206)  301-4500
Notices  to  Borrower:     At  the  addresses  shown  on  Exhibit  E
                                                          ----------
     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
     General  Electric  Capital  Corporation
     Loan  No.  07-0004024
     2  Wisconsin  Circle,  Suite  400
     Chevy  Chase,  Maryland  20815
     Attn:  Manager,  Portfolio  Management  Group
Notices  to  Lender:     Telecopy:  (301)  664-9843
     General  Electric  Capital  Corporation
     Loan  No.  07-0004024
     100  Congress,  Suite  700
     Austin,  Texas  78701
     Attn:  Diana  Pennington,  Vice  President and Chief Counsel, Senior Living
Group
With  a  copy  to:     Telecopy:  (512)  476-7832
     General  Electric  Capital  Corporation
     Loan  No.  07-0004024
     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; 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, each
Borrower,  each  Operator  and  Guarantor,  subject  to  the  provisions of this
Agreement.  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.  BORROWERS  HEREBY  CONSENT TO THE JURISDICTION OF ANY STATE OR
          -----
FEDERAL  COURT  LOCATED  WITHIN  THE  COUNTY  OF  COOK,  STATE  OF  ILLINOIS AND
IRREVOCABLY AGREE 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.  BORROWERS  EXPRESSLY SUBMIT AND CONSENT TO THE
JURISDICTION  OF  THE  AFORESAID  COURTS  AND  WAIVE  ANY  DEFENSE  OF FORUM NON
CONVENIENS.  BORROWERS  HEREBY WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS AND
AGREES  THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON BORROWERS BY CERTIFIED
OR  REGISTERED  MAIL,  RETURN  RECEIPT REQUESTED, ADDRESSED TO BORROWERS, 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.  BORROWERS 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  BORROWERS  AND  LENDER, AND BORROWERS
ACKNOWLEDGE  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.  BORROWERS 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.
BORROWERS  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  Borrowers,
Operators,  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
thereto.
8.17.     BORROWER'S  KNOWLEDGE.  When  the  phrase "to Borrower's knowledge" or
          ---------------------
words  of  similar  meaning  is/are used in this Agreement, Borrower's knowledge
shall  be  deemed  to include the knowledge of any Operator or Guarantor.  It is
understood  and  agreed  that  Borrower  has  an  obligation to make appropriate
inquiry  and  investigation of each Operator and Guarantor regarding the subject
matter  of  this Agreement and the other Loan Documents and the operation of the
Projects.
8.18.     OPERATION  OF  THE  PROJECT.  To  the  extent  that  this  Agreement,
          ---------------------------
including the Senior Housing Rider, requires any Borrower to perform obligations
relating to the operation of the Projects, or any of them, for which an Operator
or  Guarantor  is responsible, it is intended to mean that Borrowers shall cause
the  Operators  or  Guarantor,  as  applicable,  to  perform  such  obligations;
provided,  however,  the failure of such Operator(s) and/or Guarantor to perform
any  such  obligation  shall  be  deemed to be a failure of Borrowers to perform
their  obligations  under  this  Agreement.
8.19.     JOINT  AND  SEVERAL  LIABILITY.  All  covenants and agreements of each
          ------------------------------
Borrower,  each Operator and Guarantor under the Loan Documents (or any of them)
shall  be  joint and several.  Without limiting the generality of the foregoing,
each  Borrower  agrees  that  it  is liable for the repayment of the entire Loan
outstanding  from time to time notwithstanding the fact it may not have executed
each  Note.
8.20.     BORROWERS'  WAIVERS.  Each  Borrower's obligations hereunder and under
          -------------------
the  other  Loan  Documents  to  which  it  is  a  party  shall not be released,
discharged  or  affected in any way by any circumstance or condition, including,
without  limitation:
(a)     an  election  of  remedies  by  Lender,  even  though  that  election of
remedies,  such  as  a  nonjudicial  foreclosure  (or  UCC sale) with respect to
security  (whether  such  security is real property or personal property), for a
guaranteed  obligation,  has  destroyed  a  Borrower's rights of subrogation and
reimbursement against any other Borrower by the operation of Section 580d of the
     California  Code of Civil Procedure, any similar statute of any other State
or  otherwise;
(b)     any  right  to  a  fair  value hearing with respect to any Project under
California  Code  of  Civil Procedure Section 580a or any similar statute of any
other  State  to determine the size of any deficiency under the Loan following a
trustee's  sale  with  respect  to  such  Project;
(c)     the attempt or the absence of any attempt by Lender to obtain payment or
performance  by  any  Borrower  or any guarantor of the Loan (the obligations of
Borrowers  for  payment of the Loan and performance of this Loan Agreement being
joint  and  several);
(d)     Lender's  delay  in enforcing any Borrower's obligations hereunder or of
any  other  party  under  the  Loan  Documents, or any prior partial exercise by
Lender  of  any  right  or  remedy  hereunder  or  under  any  of the other Loan
Documents;
(e)     any  renewal,  extension,  substitution, modification, replacement of or
indulgence  with  respect  to,  the  Indebtedness, all of which Lender is hereby
authorized  to  make;
(f)     the  fact that any Borrower is not liable for the payment or performance
of  the  Indebtedness,  or  any portion thereof, for any reason whatsoever, each
Borrower  being  liable  for  the  Indebtedness notwithstanding that one or more
other  Borrowers  may  not  be;
(g)     any  sale,  exchange,  release,  surrender  or  other disposition of, or
realization upon, any collateral securing the Indebtedness, or any settlement or
compromise of any guaranties of the Indebtedness, or any other obligation of any
person  or  entity  with  respect  to  the  Loan  Documents;
(h)     the  acceptance  by  Lender  of  any  additional  security  for  the
Indebtedness;
(i)     the lack of validity or enforceability of, or Lender's waiver or consent
with  respect  to,  any  provision  of  any  instrument  evidencing, securing or
otherwise  relating  to the Indebtedness, or any part thereof, including without
limitation  the  Loan  Documents;
(j)     the failure by Lender to take any steps to perfect, maintain, or enforce
its  security interests or remedies under the Loan Documents, or to preserve its
rights  to  or  protect  any  security  or  collateral,  for  the  Indebtedness;
(k)     any  voluntary  or  involuntary  bankruptcy, insolvency, reorganization,
arrangement, readjustment, assignment for the benefit of creditors, composition,
receivership,  liquidation,  marshalling  of  assets  and liabilities or similar
event  or  proceedings with respect to any Borrower or Guarantor, as applicable,
or any of their respective properties (each, an "INSOLVENCY PROCEEDING"), or any
action  taken  by  Lender,  any  trustee or receiver or by any court in any such
proceeding;
(l)     the  failure  by  Lender  to  file or enforce a claim against the estate
(either  in  an  Insolvency  Proceeding  or other proceeding) of any Borrower or
Guarantor;
(m)     in  any  proceeding  under Title 11 of the United States Code (11 U.S.C.
Section  101  et seq.), as amended (the "BANKRUPTCY CODE"):  (i) any election by
Lender  under  Section  1111(b)(2) of the Bankruptcy Code, (ii) any borrowing or
grant of a security interest by a Borrower as debtor-in-possession under Section
364  of  the  Bankruptcy  Code,  (iii)  the  inability  of Lender to enforce the
Indebtedness  against  any  Borrower  by  application  of  the  automatic  stay
provisions  of  Section  362  of  the Bankruptcy Code, or (iv) the disallowance,
under  Section  502  of  the  Bankruptcy Code, of all or any portion of Lender's
claim(s)  against  any  Borrower  for  repayment  of  the  Indebtedness;
(n)     the  failure  of  any  Borrower  to  receive  notice  of  any  intended
disposition  of  the  collateral  for  the  Indebtedness;
(o)     any  merger  or  consolidation  of  any  Borrower into or with any other
entity,  or  any sale, lease or transfer of any of the assets of any Borrower or
Guarantor  to  any  other  person  or  entity;
(p)     any  change  in  the  ownership  of  any  Borrower, or any change in the
relationship  between  any Borrower and Guarantor or any termination of any such
relationship;
(q)     the  dissolution  or  other  change  in status of Borrower or Guarantor;
(r)     the  making  of  additional  loans  to  any  Borrower,  the  increase or
reduction  of  the maximum principal amount of the Indebtedness, the increase or
reduction in the interest rate provided in the Notes, or any other modification,
amendment,  release  or  waiver  of  the  terms  of  the  Loan  Documents;
(s)     the  absence,  impairment  or  loss  of  any  right  of reimbursement or
subrogation  or  other  right  or  remedy  of  any  Borrower;  and
(t)     Nevada Revised Statute 40.430, Nevada's one-action rule, the application
and  protections  of  which  each  Borrower  waives;  and
(u)     any  other  circumstance  which  might  otherwise  constitute a legal or
equitable discharge or defense of any Borrower, Guarantor or any other guarantor
of  the  Indebtedness.
     Each  Borrower  hereby  expressly  waives and surrenders any defense to its
liability  under this Loan Agreement and the other Loan Documents to which it is
a  party based upon any of the foregoing acts, omissions, agreements, waivers or
matters,  whether  or  not such Borrower had notice or knowledge of same.  It is
the  purpose  and  intent hereof that the obligations of each Borrower hereunder
shall  be  absolute  and  unconditional  under  any  and  all  circumstances.
Without limiting the generality of the foregoing, each Borrower hereby expressly
waives  any  and  all  benefits  which  might otherwise be available to it under
California  Civil Code Sections 2809, 2810, 2819, 2839, 2845 through 2847, 2849,
2850, 2899 and 3433, and California Code of Civil Procedure Sections 580a, 580b,
580d  and  726,  or  any  similar  statutes  of  any  State.

<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.

BORROWERS:

EMERITUS  REALTY  II,  LLC,  a  Delaware  limited  liability  company
By:     Emeritus  Realty  Corporation,  a  Nevada  corporation,  its sole member
     By:      /s/  Raymond  R.  Brandstrom
     Name:       Raymond  R.  Brandstrom
     Its:             Vice  President  of  Finance

EMERITUS  REALTY  III,  LLC,  a  Delaware  limited  liability  company
By:     Emeritus  Realty  Corporation,  a  Nevada  corporation,  its sole member
     By:      /s/  Raymond  R.  Brandstrom
     Name:       Raymond  R.  Brandstrom
     Its:             Vice  President  of  Finance

EMERITUS  REALTY  V,  LLC,  a  Delaware  limited  liability  company
By:     Emeritus  Realty  Corporation,  a  Nevada  corporation,  its sole member
     By:      /s/  Raymond  R.  Brandstrom
     Name:       Raymond  R.  Brandstrom
     Its:             Vice  President  of  Finance

EMERITUS  REALTY  VII,  LLC,  a  Delaware  limited  liability  company
By:     Emeritus  Realty  Corporation,  a  Nevada  corporation,  its sole member
     By:      /s/  Raymond  R.  Brandstrom
     Name:       Raymond  R.  Brandstrom
     Its:             Vice  President  of  Finance

EMERITUS  REALTY  XIV,  LLC,  a  Delaware  limited  liability  company
By:     Emeritus  Realty  Corporation,  a  Nevada  corporation,  its sole member
     By:      /s/  Raymond  R.  Brandstrom
     Name:       Raymond  R.  Brandstrom
     Its:             Vice  President  of  Finance

EMERITUS  REALTY  BOZEMAN,  LLC,  a  Delaware  limited  liability  company
By:     Emeritus  Realty  Corporation,  a  Nevada  corporation,  its sole member
     By:      /s/  Raymond  R.  Brandstrom
     Name:       Raymond  R.  Brandstrom
     Its:             Vice  President  of  Finance

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

EMERITUS  REALTY  PUYALLUP,  LLC,  a  Delaware  limited  liability  company
By:     Emeritus  Realty  Corporation,  a  Nevada  corporation,  its sole member
     By:      /s/  Raymond  R.  Brandstrom
     Name:       Raymond  R.  Brandstrom
     Its:             Vice  President  of  Finance

LENDER:

GENERAL  ELECTRIC  CAPITAL  CORPORATION,
a  Delaware  corporation


By:  /s/  Jefferey  N.  Muchmore
     ---------------------------
Name:  Jefferey  N.  Muchmore
       ----------------------
Its:  Vice  President
      ---------------


<PAGE>



                                   EXHIBIT A-1
Property:     Fulton  Villa,  Stockton,  California (the "FULTON VILLA PROJECT")
--------
Owner:     Emeritus  Realty  VII,  LLC
-----
Number  of  Units:     81
-----------------

Legal  Description:
------------------
PARCEL  ONE:

Parcel  A, as shown on that certain Parcel Map filed for record July 18, 1972 in
Book  1  of Parcel Maps, page 81, San Joaquin County Records, being a portion of
the  Southeast quarter of Section 17, C.M. Weber Grant, in the City of Stockton.
PARCEL  TWO:

A  right  of  way  20 feet in width lying Southerly of the Northerly line of the
land  described  in  Deed  to  Five Oak Pyramid, Inc., a California corporation,
dated  June  30,.  1954  recorded July 1, 1954 in Book 1646 of official Records,
page  496,  San  Joaquin  County  Records.

EXCEPT  THEREFROM  the  Westerly  203.81  feet.


<PAGE>


                                   EXHIBIT A-2
Property:     Villa Del Rey, Escondido, California (the "VILLA DEL REY PROJECT")
--------
Owner:     Emeritus  Realty  VII,  LLC
-----
Number  of  Units:     84
-----------------

Legal  Description:
------------------
(ASSESSOR'S  PARCEL  NO.  230-141-11)

ALL  THAT  PORTION OF LOT 7 IN BLOCK 179 OF THE RANCHO RINCON DEL DIABLO, IN THE
CITY OF ESCONDIDO, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO
MAP  THEREOF  NO.  723  FILED  IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY,  AUGUST  13,  1892,  DESCRIBED  AS  FOLLOWS:

BEGINNING  AT  A  POINT  IN THE NORTHWESTERLY LINE OF SAID LOT 7 DISTANT THEREON
NORTH  53  59'  20" EAST 226.83 FEET FROM THE NORTHWESTERLY CORNER THEREOF, SAID
POINT  BEING  ALSO  A  POINT  IN  THE  CENTER LINE OF THE SAN DIEGO COUNTY WATER
AUTHORITY  EASEMENT;  THENCE  CONTINUING  NORTH  53  59'  20"  EAST  ALONG  SAID
NORTHWESTERLY  LINE  OF LOT 7 A DISTANCE OF 66.87 FEET TO A CUSP FORMED WITH THE
ARC OF A 20.00 FOOT RADIUS CURVE, CONCAVE EASTERLY A RADIAL OF WHICH BEARS NORTH
36  00'  40"  WEST  TO  SAID  POINT  BEING  THE  TRUE POINT OF BEGINNING; THENCE
SOUTHERLY  ALONG  SAID  CURVE 30.83 FEET THROUGH A CENTRAL ANGLE OF 88  19' 45";
THENCE  TANGENT  TO  SAID_  CURVE  SOUTH  34  20'  25"  EAST  317.19 FEET TO THE
BEGINNING  OF  A  TANGENT  1000 FOOT RADIUS CURVE, CONCAVE NORTHEASTERLY; THENCE
SOUTHEASTERLY ALONG SAID CURVE 21.43 FEET THROUGH A CENTRAL ANGLE OF 1  13' 40";
THENCE  TANGENT  TO  SAID  CURVE  SOUTH  35  34'  05"  EAST  83.06  FEET  TO THE
NORTHEASTERLY  LINE  OF  THE  LAND  CONVEYED  TO  THE  CITY OF ESCONDIDO BY DEED
RECORDED  DECEMBER 20, 1968 FILE NO. 223861 OF OFFICIAL RECORDS SAID POINT BEING
ALSO A POINT IN THE ARC OF A 1077 FOOT RADIUS CURVE, CONCAVE SOUTHERLY, A RADIAL
OF  WHICH  BEARS NORTH 4  27' 04" WEST TO SAID POINT; THENCE EASTERLY ALONG SAID
NORTHEASTERLY  LINE  TO AND ALONG THE NORTHEASTERLY LINE OF THE LAND CONVEYED TO
THE  CITY  OF  ESCONDIDO  BY DEED RECORDED DECEMBER 20, 1968, FILE NO. 223862 OF
OFFICIAL  RECORDS ALONG THE ARC OF SAID 1077 FOOT RADIUS CURVE THROUGH A CENTRAL
ANGLE  OF  9  16' 54" A DISTANCE OF 178.04 FEET (RECORD 9  27' 38" A DISTANCE OF
177.83 FEET) AND TANGENT TO SAID CURVE SOUTH 84  58' 46" EAST 77.22 FEET (RECORD
SOUTH  83  52'  27"  EAST  77.78 FEET TO THE EASTERLY LINE OF SAID LOT 7; THENCE
ALONG  SAID  EASTERLY  LINE  NORTH 18  03' 27" WEST 627.50 FEET (RECORD NORTH 16
58'  15" WEST 627.52 FEET PER SAID FILE NO. 223862) TO THE MOST NORTHERLY CORNER
OF  SAID  LOT  7;  THENCE ALONG THE NORTHWESTERLY LINE THEREOF SOUTH 53  59' 20"
WEST  364.34  FEET  TO  THE  TRUE  POINT  OF  BEGINNING.


<PAGE>
                                   EXHIBIT A-3
Property:     The  Condorde,  Las  Vegas,  Nevada  (the  "CONCORDE  PROJECT")
--------
Owner:     Emeritus  Realty  V,  LLC
-----
Number  of  Units:     103
-----------------

     Government Lot Thirty-Seven (37) in Section 13, Township 21 South, Range 61
East,  M.D.B.&M.,  County  of  Clark  County,  Nevada.

     EXCEPT  that  portion  conveyed to the County of Clark for road purposes by
Deed  recorded January 17, 1996 in Book 960117 as Document No. 01463 of Official
Records.
Legal  Description:
------------------


<PAGE>
                                   EXHIBIT A-4
Property:     River  Oaks,  Englewood,  Florida
--------
Owner:     Emeritus  Realty  III,  LLC
-----
Number  of  Units:     155
-----------------

Legal Description:     The Northwesterly 533.39 feet, more or less, of Lots 509,
-----------------
510 and 511, of ENGLEWOOD GARDENS - UNIT-NO. 6, as per plat thereof, recorded in
Plat  Book  4, pages 74 and 75, Public Records of Sarasota County, Florida. LESS
AND  EXCEPT  the  Northwesterly  27  feet  thereof, conveyed to county for road.


<PAGE>
                                   EXHIBIT A-5
Property:     Stanford  Center,  Altamonte  Springs,  California  (the "STANFORD
--------
PROJECT")
----
Owner:     Emeritus  Realty  V,  LLC
-----
Number  of  Units:     117
-----------------

Legal  Description:
------------------
That  part  of  Lots  613,  614,  615,  616,  634,  635, 636 and 637, all in the
subdivision  of  Altamonte  Land, Hotel and Navigation Company, according to the
plat  thereof  as  recorded  in  Plat  Book 1, page 12, of the Public Records of
Seminole  County,  Florida,  described  as  follows:

Commencing  at  the  Southeast  corner of said Lot 637; thence North 000 17' 25"
West,  along the East line of said Lot 637, a distance of 5.00 feet to the North
right  of  way  line  of Orange Drive; thence on a bearing of South 90   00' 00"
West,  along  said  North right of way line, 141.71 feet to the West line of the
East  9.71 feet of said Lot 636 and the Point of Beginning; thence continue on a
bearing  of  South  90   00'  00" West along said North right of way line 260.00
feet  to  the  West  line of the East 5.80 feet of said Lots 634 and 613; thence
North  00  18'  40" West, along said West line, 369.91 feet to the North line of
the  South  111.00 feet of said Lots 613 and 616; thence South 89  53' 35" East,
along  said  North  line, 401.85 feet to the East line of said Lots 616 and 637;
thence  South  00  17'32"  East,  along said East line, 184.16 feet to the North
line  of  the South 190.00 feet of said Lots 636 and 637; thence on a bearing of
West,  along  said North line, 127.44 feet; thence South 53  48' 08" West, 17.62
feet  to  the  West line of the East 9.71 feet of said Lot 636; thence South 000
17'25"  East,  along  said  West  line  174.59  feet  to the Point of Beginning.

TOGETHER  WITH  an  easement  as  created  by  access and parking easement dated
December  23,  1986,  and  recorded  February 19, 1987, in Official Records Book
1820, and 287, of the Public Records of Seminole County, Florida, for access and
parking  purposes  over and across that part of said Lots 636 and 637, described
as  follows:

Commencing  at  the  Southeast  corner of said Lot 637; thence North 00  17' 25"
West,  along the East line of said Lot 637, a distance of 5.00 feet to the North
right-of-way line of Orange Drive; thence on a bearing of West, along said North
line  141.71 feet to the West line of the East 9.71 feet of said Lot 636; thence
North  00  17'  25"  West,  120.00  feet  to the Point of Beginning; thence on a
bearing  of  East, 75.00 feet; thence South 00   17' 25" East 90.00 feet; thence
on  a bearing of West, 75.00 feet to the West line of the East 9.71 feet of said
Lot  636;  thence  North 00  17' 25" West, 90.00 feet to the Point of Beginning.

Subject  to an easement for ingress, egress and utility purposes over and across
that  part  of  said  Lot  636,  described  as  follows:

A  portion  of Lot 636, ALTAMONTE LAND HOTEL AND NAVIGATION COMPANY SUBDIVISION,
as recorded in Plat Book 1, page 12, Public Records of Seminole County, Florida,
being  described  as  follows:
From the Southeast corner of Lot 637 of said ALTAMONTE LAND HOTEL AND NAVIGATION
COMPANY  SUBDIVISION,  run West along the South line of said Lots 636 and 637, a
distance  of  141.71  feet to the Point of Beginning; thence continue West along
said  South  lot  line  65.00  feet;  thence North 000 17' 25" West 110.00 feet;
thence  East 65.00 feet; thence South 00   17' 25" East 110.00 feet to the Point
of  Beginning,  as  recorded  in  Official  Records  Book 1820, page 291, Public
Records  of  Seminole  County,  Florida.

NOW  KNOWN  AS  Parcel  A  and part of Parcel B, "LA CASA GRANDE", Plat Book 39,
pages  50  and  51,  Public  Records  of  Seminole  County,  Florida.


<PAGE>
                                   EXHIBIT A-6
Property:     La  Casa  Grand,  New  Port  Richey,  Florida
--------
Owner:     ESC-Port  St.  Richie,  LLC
-----
Number  of  Units:     193
-----------------

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  aid  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-7
Property:     Silver  Pines,  Cedar  Rapids,  Iowa
--------
Owner:     Emeritus  Realty  II,  LLC
-----
Number  of  Units:     69
-----------------

Legal  Description:     LOT  2 , EXCEPTING THEREFROM THE NORTH 150 FEET, AND LOT
------------------
3,  RADEC FREEWAY THIRD ADDITION TO THE CITY OF CEDAR RAPIDS, LINN COUNTY, IOWA.


<PAGE>
                                   EXHIBIT A-8
Property:     Juniper  Meadows,  Lewiston,  Idaho
--------
Owner:     Emeritus  Realty  II,  LLC
-----
Number  of  Units:     74
-----------------

Legal  Description:     Lot  1  of  Scenic  Crest  4th  Addition  to the City of
------------------
Lewiston,  according to the official plat thereof, filed in CABII 327B of Plats,
-------
Official  Records  of  Nez  Perce  County,  Idaho


<PAGE>
                                   EXHIBIT A-9
Property:     Courtyard  at  the  Willows,  Puyallup,  Washington
--------
Owner:     Emeritus  Realty  Puyallup,  LLC
-----
Number  of  Units:     101
-----------------

Legal  Description:
------------------
PARCEL  A:

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.

PARCEL  B:

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. PARCEL C:

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.

PARCEL  D:

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.

PARCEL  E:

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 NUMBER
9806190616.

PARCEL  F:

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 A-10
Property:     Spring  Meadows,  Bozeman,  Montana  (the  "Spring  Property")
--------
Owner:     Emeritus  Realty  Bozeman,  LLC
-----
Number  of  Units:     71
-----------------

Legal  Description:     Lot  2 in Block 2 of Spring Meadows Subdivision, being a
------------------
portion  of  unplatted  SW1/4  of  Section  19  and  Certificate of Survey 819A,
situated  in  the  NW1/4  of Section 19, Township 2 South, Range 6 East, P.M.M.,
Gallatin  County, Montana, according to 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-11
Property:     The  Lodge  at  Eddy  Pond,  Auburn,  Massachusetts
--------
Owner:     Emeritus  Realty  XIV,  LLC
-----
Number  of  Units:     108
-----------------

Legal  Description:
------------------
Lot  1
------

Auburn,  Massachusetts

A  certain  parcel  of  land  in  the  Commonwealth  of Massachusetts, County of
Worcester,  Town  of Auburn, Situated on the southerly side of Washington Street
(Route  20)  and  shown  as Lot 1 on a plan entitled "Plan of Land in Auburn, MA
(Worcester  County),"  scale  1" - 50', dated August 14, 2002, prepared by Beals
and Thomas, Inc., recorded on August 28, 2002 in Plan Book 785 as Plan 28, being
more  particularly  bounded  and  described  as  follows:

Beginning  at  the  northwesterly  corner of the parcel on the southerly side of
Washington  Street,  thence  running:

N 73 41 31 E     13.19 Feet, to a point, said course being by Washington Street,
thence  turning  and  running;

S 16 18 29 E     25.00 Feet, to a point, said course being by Washington Street,
thence  turning  and  running;

N  73  41  31  E     281.07  Feet,  to  a point, said course being by Washington
Street,  thence  turning  and  running;

S  20  04  51  W     330.52 feet, to a point, said course being by Lot 2 on said
plan,  thence  turning  and  running;

S  23  52  15  E     193.52  feet,  to a point, said course being by said Lot 2,
thence  turning  and  running;

S  75 0144 E     144.12 feet to a point, said course being by said Lot 2, thence
turning  and  running;

S  36  36  20  E     270.85  feet,  to a point, said course being by said Lot 2,
thence  turning  and  running;

S  05  48  25  E     113.00  feet,  to a point, said course being by said Lot 2,
thence  turning  and  running;

N  79  20 40 W     737.00 feet, to a point, said course being by land n/f of the
Town  of  Auburn,  thence  turning  and  running;

N  13  27 36 E     678.19 feet, to a point, said course being by land n/f of the
Town  of  Auburn,  to  the  point  of  beginning.

Containing  300,897  square  feet  more  or  less.

Subject  to  and  with  the  benefit  of  Drainage,  Utility and Access Easement
Agreement  by  and  between Auburn Land, LLC and LM Auburn Assisted Living, LLC,
dated  April  26,  1996  and  recorded  May  1,  1996  at  Book 17872, Page 321.

Subject  to  and  with  the  benefit of Deed of Easement from LM Auburn Assisted
Living,  LLC  and Auburn Land, LLC to Auburn Water District dated April 29, 1996
and  recorded  May  1,  1996  at  Book  17872,  Page  398.

Confirmatory  Gas Easement dated August 22, 2002 and recorded on August 28, 2002
at  the  Worcester  Registry  of  Deeds  as  instrument  number  164439.


<PAGE>
                                    EXHIBIT B
                                   LITIGATION
                                   ----------
                                    Attached.


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


<PAGE>
                                    EXHIBIT D
                               PRINCIPAL PAYMENTS
                               ------------------
                                    Attached.


<PAGE>
                                    EXHIBIT E
                              BORROWER'S ADDRESSES
                              --------------------


<PAGE>
                                   SCHEDULE I

                             INDEX OF DEFINED TERMS

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



<PAGE>
Administrative  Simplification     15
Affiliate     18
Agreement     1
Assignment  of  Leases     2
Assignments  of  Leases     2
Base  Rate     4
Borrower     1
Borrower  Operating  Agreement     11
Borrowers     1
Borrower's  Equity     8
business  day     25
Closing  Date     2
Collateral     7
Concorde  Property     1
control     18
Costs     22
Debt  Coverage  Ratio     3
Earnout  Advance     2
Effective  Rental  Income     3
Environmental  Indemnity     8
Event  of  Default     21
Exit  Fee     6
Expenses     3
Extension  Notice     4
Guarantor     8
Guaranty     8
Healthcare  Laws     15
HIPAA     15
HIPAA  Compliance  Date     16
HIPAA  Compliance  Plan     15
HIPAA  Compliant     15
Improvements     1
Indebtedness     21
Indemnitee     23
Initial  Funding  Amount     2
Interest  Rate     4
Leases     9
Lender     1
Loan     1
Loan  Documents     2
Management  Contract     10
Maturity  Date     4
Mezzanine  Borrower  Documents     12
Mezzanine  Lender     10
Mezzanine  Loan     10
Mezzanine  Loan  Documents     10
Mortgage     2
Mortgages     2
Net  Operating  Income     3
Note  A     1
Note  B     1
Notes     1
Operating  Lease     1
Operator     1
Operators     1
Person     18
Project     1
Project  Yield     3
Projects     1
Properties     1
Property     1
Qualified  Non-Residential  Lease     9
Repayment  Date     5
Replacement  Reserve     19
Stanford  Property     1
Title  Policy     9

<PAGE>



<PAGE>
                                                            Loan No. 07-0004024
                              SENIOR HOUSING RIDER
     THIS  SENIOR  HOUSING  RIDER is attached to and made a part of that certain
Loan  Agreement dated as of the ___ day of December, 2002, among EMERITUS REALTY
VII,  LLC; EMERITUS REALTY III, LLC; EMERITUS REALTY V, LLC; EMERITUS REALTY II,
LLC;  EMERITUS  REALTY PUYALLUP, LLC; EMERITUS REALTY BOZEMAN, LLC; and EMERITUS
REALTY  XIV,  LLC;  each  a Delaware limited liability company, and ESC-PORT ST.
RICHIE,  LLC,  a  Washington  limited  liability company, (each a "BORROWER" and
collectively  with certain affiliates of such parties which are now or hereafter
become  parties  to  this  Rider,  "BORROWERS"),  EMERITUS PROPERTIES III, INC.;
EMERITUS PROPERTIES II, INC.; and EMERITUS PROPERTIES V, INC., each a Washington
corporation,  ESC-NEW  PORT  RICHEY,  LLC;  LLC;  ESC-BOZEMAN, LLC; and EMERITUS
PROPERTIES  XIV,  LLC;  each  a  Washington  limited  liability company (each an
"OPERATOR"  and  collectively  with certain affiliates of such parties which are
now  or  hereafter  become  parties  to  this  Rider,  "OPERATORS")  EMERITUS
CORPORATION,  a  Washington  corporation  (as  an "Operator" with respect to the
Projects  located  in  California, and a "MANAGER" with respect to certain other
Projects)  and  GENERAL  ELECTRIC  CAPITAL  CORPORATION,  a Delaware corporation
(General  Electric  Capital  Corporation  and  its  successors  and  assigns are
hereinafter  referred to as "LENDER"). To the extent of any conflict between the
terms  and  provisions  of  this  Rider and the terms and provisions of the Loan
Agreement,  the  terms and provisions of this Rider shall govern and control the
rights  and  obligations  of  the  parties; provided, however, in any event, the
obligations  and  covenants of Borrowers, Operators and Manager set forth herein
shall  be  subject to the notice and cure periods set forth in Section 7.1(c) of
the  Loan  Agreement.
R-1.     All  capitalized  terms  not  defined  in  this  Rider  shall have the
meanings  ascribed  to  such  terms  as  set  forth  in  the  Loan  Agreement.
R-2.     The  following  representations,  warranties  and covenants are hereby
added  to  the  representations,  warranties and covenants contained in the Loan
Agreement.
Each  Borrower  represents,  covenants,  and warrants, as of the date hereof and
through  the  term  of  Loan,  as  follows:
     (a)     Each Borrower, together with Manager, and the applicable Operator,
is  using  and  operating  its  Property  and Improvements (collectively, each a
"FACILITY"  and  collectively,  the "FACILITIES") as assisted and/or independent
senior housing facilities, each Facility having the number of units set forth on
Exhibit  A  to  the  Loan Agreement (as modified from time to time with Lender's
consent,  which consent shall not be unreasonably withheld, the "LICENSED USE").
As  of  the  date  hereof,  in  connection  with the operation of each Facility,
Manager,  each  Borrower  and each Operator complies, and throughout the term of
the  Loan  will  comply,  with  all  federal, state and local laws, regulations,
quality  and  safety  standards, accreditation standards and requirements of the
applicable  state  department  of  health  or  other applicable state regulatory
agency  (each  a  "DOH")  and  all  other  federal,  state or local governmental
authorities  including,  to  the  extent  applicable  to  the  Facilities, those
relating  to  the  quality  and  adequacy  of  medical  care,  distribution  of
pharmaceuticals,  rate  setting,  equipment,  personnel,  operating  policies,
additions  to facilities and services and fee splitting.  Each Facility shall be
operated  at  all  times  in  compliance  with  such  laws  and  requirements.
Notwithstanding  anything to the contrary set forth herein, no Borrower Operator
or  Manager  shall be deemed to be in default under this clause (a) in the event
it  is  cited  for  minor  deficiencies  during  the  course  of  licensure  or
certification  surveys and the same are corrected within thirty (30) days, or so
long  as  Borrower,  Operator or Manager, as applicable is diligently pursuing a
cure, such longer period as is required to correct such deficiency, and provided
further  that Borrower, Operator or Manager delivers to Lender evidence that the
DOH  has  approved  such cure in its ordinary course of review of the Facility.
(b)     All  governmental  licenses,  permits,  regulatory  agreements or other
approvals  or  agreements  necessary  or  desirable for the Licensed Use of each
Facility  are  held  by  a  Borrower,  Operator  or  Manager  in the name of the
Borrower,  Operator  or Manager as required under applicable law and are in full
force and effect, including, if required, a valid certificate of need ("CON") or
similar  certificate,  license,  or approval issued by the DOH for the requisite
number  of  units  in  each Facility, and a provider agreement or other required
documentation  of  approved  provider  status  for  each  provider  payment  or
reimbursement program listed in Exhibit R-1 hereto, if applicable.  All required
permits,  certificates,  licenses  and  governmental  approvals  necessary  for
operation of each Facility for the Licensed Use are listed on Exhibit R-1 hereto
(collectively,  the  "LICENSES").  So long as the Loan remains outstanding, each
Borrower (and each Operator and Manager) shall operate its Facility or cause its
Facility  to be operated in a manner such that the Licenses shall remain in full
force  and effect.  True and complete copies of the Licenses have been delivered
to  Lender.
(c)     The  Licenses  for  each  Facility,  including  without  limitation, if
applicable,  the  CON:
     (i)     May  not be, and have not been, and will not be transferred to any
location  other  than  that  Facility;
(ii)     Are  not  now  and  will not be pledged as collateral security for any
other  loan  or  indebtedness;  and
(iii)     Are  held  free  and  will  remain  free  from  restrictions or known
conflicts which would materially impair the use or operation of the Facility for
the  Licensed  Use,  and shall not be provisional, probationary or restricted in
any  way which would have an adverse affect on the operation of the Facility for
the  Licensed  Use.
     (d)     No  Borrower,  Operator  or  Manager  shall:
     (i)     Rescind, withdraw, revoke, amend, modify, supplement, or otherwise
alter  the  nature,  tenor  or scope of the Licenses for any Facility; provided,
however,  nothing herein shall be construed as prohibiting Borrower, Operator or
Manager  from  modifying  the Licenses in any manner which will permit Borrower,
Operator or Manager to provide additional services at the Facility which are not
currently  offered  but which are within the use of the Project at the time this
Rider  was  executed  or  other  uses  reasonably  incidental  thereto;
(ii)     Amend  or  otherwise  change  any Facility's authorized units capacity
and/or the number of units approved by the DOH; except that, subject to Lender's
consent, which consent shall not be unreasonably withheld or delayed, a Borrower
may  change  the  allocation  of  units  between assisted living and independent
living  and  except  that,  without  Lender's consent but with notice to Lender,
Borrower  may  increase the number of approved beds/units at the Facility unless
doing so involves an expenditure which is otherwise subject to Lender's approval
under  the  provisions  of  the  Loan Agreement or one or more of the other Loan
Documents,  in  which  case  such approval shall be governed by the terms of the
other  provisions  of  the  Loan  Agreement  or the applicable Loan Documents;
(iii)     Replace  or transfer all or any part of a Facility's units or beds to
another  site  or  location;  or
(iv)     Voluntarily  transfer  or  encourage the transfer of any resident of a
Facility  to  any other facility not subject to a Mortgage, unless such transfer
is  at  the  request  of  the resident or is for reasons relating to the health,
required  level  of  medical care or safety of the resident to be transferred or
for  non-payment  of  stay  or  as  required  by  applicable  law.
     (e)     If  and  when  a Borrower, Operator or Manager participates in any
Medicare  or  Medicaid  or  other  third-party  payor  program with respect to a
Facility,  that  Facility  will  remain  in compliance with all requirements for
participation  in  Medicare  and  Medicaid,  including the Medicare and Medicaid
Patient  Protection  Act  of  1987,  and  such other third party payor programs,
including  any  local  third-party  payor  program  ("LOCAL PROGRAM"); provided,
however,  that no Borrower, Operator or Manager shall be deemed to be in default
of  its  obligations  under  this  clause (e) in the event it is cited for minor
deficiencies  during  the  course  of licensure or certification surveys and the
same are corrected within thirty (30) days (or such longer period as required so
long  as  Borrower,  Operator  or  Manager is diligently pursuing correction) in
accordance  with  a plan of correction acceptable to the entity or agency having
jurisdiction  over  the  applicable  Medicare,  Medicaid  or  Local  Program;
(f)     Each  Facility will remain in conformance in all material respects with
all  insurance,  reimbursement  and  cost  reporting  requirements,  and,  if
applicable,  has  a current provider agreement which is in full force and effect
under  Medicare  and  Medicaid.
(g)     There  is  no,  and  during  the  term  of  the  Loan there shall be no
threatened,  existing or pending revocation, suspension, termination, probation,
restriction,  limitation,  or  nonrenewal  affecting any Borrower, any Operator,
Manager (with respect to its operation of the Facilities) or any Facility or any
participation  or  provider  agreement  with  any  third-party  payor, including
Medicare,  Medicaid, Local Program, Blue Cross and/or Blue Shield, and any other
private  commercial insurance managed care and employee assistance program (such
programs,  the  "THIRD-PARTY PAYORS' PROGRAMS") to which a Borrower, an Operator
or  Manager  may presently be subject with respect to a Facility, or at any time
hereafter  is  subject.  All  Medicaid,  Medicare,  Local  Program,  and private
insurance  cost  reports  and  financial  reports  submitted  by  a Borrower, an
Operator  or  Manager,  if any, in connection with the ownership or operation of
the  Facilities  are  and  will be materially accurate and complete and have not
been  and  will not be misleading in any material respects.  Except as otherwise
disclosed in writing to Lender by Borrower prior to the execution of this Rider,
no  cost reports submitted prior to the date hereof for any Facility remain open
or  unsettled.
(h)     None  of  the  Borrowers,  Operators,  Manager  (with  respect  to  its
operations  at  the Facilities) or any Facility is or will be the subject of any
proceeding  by  any governmental agency, and no notice of any violation has been
or  will  be issued by a governmental agency that would, directly or indirectly,
or  with  the  passage  of  time:
     (i)     Have  a  material adverse impact on a Borrower's, an Operator's or
Manager's  ability  to  accept and/or retain patients at any Facility or operate
any  Facility  for  its  Licensed  Use  or result in the imposition of a fine, a
sanction,  a lower rate certification or a lower reimbursement rate for services
rendered  to  eligible  patients  at  any  Facility;
(ii)     Modify,  limit  or  annul  or  result  in  the  transfer,  suspension,
revocation  or  imposition  of  probationary  use  of  any  of the Licenses; or
(iii)     If  applicable,  affect  a  Borrower's,  an  Operator's  or Manager's
continued participation in the Medicaid or Medicare programs with respect to the
operation of any Facility, or the Local Program, or any other of the Third-Party
Payors' Programs in which any Facility now or at anytime hereafter participates,
or  any  successor  programs  thereto,  at  current  rate  certifications.
     (i)     Each  Facility  and  the use thereof complies and will continue to
comply  in  all  material  respects with all applicable local, state and federal
building  codes,  fire  codes,  health care, senior housing and other regulatory
requirements  (the  "PHYSICAL PLANT STANDARDS") and no waivers of Physical Plant
Standards  exist at any Facility, except those that are described on Exhibit R-2
attached  hereto.
(j)     Except  as  otherwise  disclosed  to  Lender  in  writing  prior to the
execution  of  this  Rider, no Facility has received a "Level A" (or equivalent)
violation,  and no statement of charges or deficiencies has been made or penalty
enforcement  action  has  been  undertaken  against  any  Facility,  Manager (in
connection  with its operation of the Facilities), an Operator or a Borrower, or
against  any  officer,  director,  partner, member or stockholder of Manager (in
connection  with  its operation of the Facilities), an Operator or a Borrower by
any  governmental  agency  during  the last three calendar years, and there have
been  no  violations  over  the  past  three  years  which  have  threatened any
Facility's,  any Manager's (in connection with its operation of the Facilities),
an  Operator's  or  a  Borrower's certification for participation in Medicare or
Medicaid  or  the  other  Third-Party Payors' Programs, if and to the extent any
Facility does now participate or has, at any time during such three year period,
participated  therein.
(k)     Except  as  otherwise  disclosed  to  Lender  in  writing  prior to the
execution  of this Rider, there are no current, pending or outstanding Medicaid,
Medicare or Third-Party Payors' Programs reimbursement audits or appeals pending
at  any  Facility, and there are no years that are subject to audit for which an
audit  has  not  yet  been  conducted.
(l)     Except  as  otherwise  disclosed  to  Lender  in  writing  prior to the
execution of this Rider, there are no current or pending Medicaid or Medicare or
Third-Party Payors' Programs recoupment efforts at any Facility.  No Borrower is
a  participant  in  any federal program whereby any governmental agency may have
the  right to recover funds by reason of the advance of federal funds, including
those  authorized  under  the  Hill-Burton  Act  (42  U.S.C.  291,  et  seq.).
(m)     No  Borrower  or  Operator  will  pledge  its receivables as collateral
security  for  any  other  loan  or  indebtedness.
(n)     There  are  no  and  there  will  remain  no  patient  or resident care
agreements  with  patients  or  residents  which deviate in any material adverse
respect  from  the  form agreements which have been delivered to and approved by
Lender  pursuant  to  Section  3.7  of  the  Loan  Agreement.
(o)     All  patient or resident records at each Facility, including patient or
resident trust fund accounts, are true and correct in all material respects, and
will  remain  true  and  correct  in  all  material  respects.
(p)     Any agreement relating to the management, and operation of any Facility
(each  a  "MANAGEMENT AND OPERATING AGREEMENT") and the manager thereunder shall
be  subject to Lender's approval and no Management and Operating Agreement shall
be modified, amended or terminated except in accordance with the requirements of
the  Loan  Documents.  Under the applicable laws and regulations in effect as of
the  date  hereof,  in  the  event  any  Management  and  Operating Agreement is
terminated  or in the event of foreclosure or other acquisition of a Facility by
Lender  or  its  designee  or  any  purchaser  at  a foreclosure sale, Borrower,
Operator,  Lender,  any  subsequent manager or any subsequent purchaser need not
obtain a CON prior to applying for and receiving Medicare or Medicaid payments.
(q)     No  Borrower  shall,  nor  shall any Facility, any Operator or Manager,
other  than  in  the  normal  course of business, change the terms of any of the
Third-Party  Payors'  Programs  now  or  hereinafter  in  effect or their normal
billing  payment  or  reimbursement policies and procedures with respect thereto
(including the amount and timing of finance charges, fees and write-offs), where
such  change  would  have  an  adverse  affect on the operations at or financial
condition  of  any  Facility.
(r)     From time to time, upon the request of Lender, regardless of whether or
not  an  Event  of  Default  has  occurred  hereunder  or  under  the other Loan
Documents,  each  Borrower  shall,  and shall cause each Operator and Manager to
complete,  execute  and  deliver  to  Lender  any  applications,  notices,
documentation,  and  other  information  necessary  or  desirable,  in  Lender's
judgment,  to  permit  Lender  or its designee (including a receiver) to obtain,
maintain  or  renew any one or more of the Licenses for a Facility (or to become
the  owner  of the existing Licenses for a Facility) and to the extent permitted
by  applicable  law  to  obtain  any  other  provider  agreements,  licenses  or
governmental  authorizations  then necessary or desirable for the operation of a
Facility  by  Lender  or  its  designee for its Licensed Use (including, without
limitation, any applications for change of ownership of the existing Licenses or
change of control of the owner of the existing Licenses).  Upon an occurrence of
an  Event  of  Default, to the extent permitted by applicable law, (i) Lender is
hereby authorized (without the consent of any Borrower, any Operator or Manager)
to  submit  any  such  applications, notices, documentation or other information
which  a  Borrower caused to be delivered to Lender in accordance with the above
provisions  to  the  applicable  governmental authorities, or to take such other
steps  as  Lender may deem advisable to obtain, maintain or renew any License or
other  license or governmental authorization in connection with the operation of
any  Facility for its Licensed Use, and each Borrower agrees to cooperate and to
cause  each Operator and Manager to cooperate with Lender in connection with the
same  and  (ii)  each Borrower, upon demand by Lender, shall take any action and
cause  each  Operator  and Manager to take any action necessary or desirable, in
Lender's  sole judgment, to permit Lender or its designee (including a receiver)
to  use,  operate  and  maintain  each  Facility  for  its Licensed Use.  If any
Borrower  fails  to  comply  with  the provisions of this subsection (q) for any
                                                          --------------
reason  whatsoever,  such  Borrower  hereby  irrevocably appoints Lender and its
designee  as  such Borrower's attorney-in-fact, with full power of substitution,
to  take  any  action  and  execute  any  documents and instruments necessary or
desirable  in  Lender's  sole  judgment  to  permit  Lender  or  its designee to
undertake  Borrower's  obligations  under this subsection (q), including without
                                               --------------
limitation,  obtaining any licenses or governmental authorizations then required
for  the operation of a Facility by Lender or its designee for its Licensed Use.
The  foregoing  power of attorney is coupled with an interest and is irrevocable
and  Lender may exercise its rights thereunder in addition to any other remedies
which  Lender  may  have  against  any  Borrower  or  Guarantor as a result of a
Borrower's  breach  of  the  obligations  contained  in  this  subsection  (q).
                                                               ---------------
(s)     Each  Borrower each Operator and Manager shall at all times comply with
all  obligations under the contracts and leases with residents of each Facility,
and no Borrower shall commit or permit any default by a Borrower, an Operator or
Manager  thereunder.  Each Borrower hereby indemnifies and holds harmless Lender
and  agrees to defend Lender (with counsel reasonably acceptable to Lender) from
and against (collectively, the "INDEMNIFIED CLAIMS") any (i) claims, proceedings
or  causes  of  action  brought  by  any  resident of a Facility, and (ii) loss,
damage,  cost  or  expense,  including  reasonable  attorneys' fees, incurred or
suffered  by  Lender as a result of any (x) breach by a Borrower, an Operator or
Manager  of any contract or lease with a resident of a Facility or (y) violation
of  any  license  or any federal, state or local law governing a Facility or the
use,  operation  or  maintenance  thereof  for  its  Licensed  Use.
(t)     Notwithstanding  the  foregoing  or  any other provision of this Senior
Housing  Rider to the contrary, if through the exercise of Lender's rights under
the  Loan  Documents  or  otherwise, Lender or an affiliate of Lender shall take
permanent  possession  and control of any Facility, Borrower shall not be liable
to Lender for any Indemnified Claims which first arose after the date ("TRANSFER
DATE") Lender or an affiliate of Lender took permanent possession and control of
that  Facility  if  (but only if) the following conditions are fully satisfied:
     (i)     None  of  any  Borrower,  any  Operator,  Manager any Affiliate of
Borrower or Manager or any agent, employee or contractor of any of the foregoing
contributed,  by act or omission, to the cause, existence, or occurrence of such
Indemnified  Claims;  and
(ii)     The  events  or  state of facts resulting (or with the passage of time
eventually  permanently  resulting) in any such Indemnified Claims did not exist
prior  to  the  Transfer  Date.

<PAGE>
IN  WITNESS WHEREOF, each Borrower, each Operator and Manager have executed this
Senior  Housing  Rider  or  have  caused  the  same  to  be executed by its duly
authorized  representatives  as  of  the  date  first  written  above.

BORROWERS:

EMERITUS  REALTY  VII,  LLC,  a  Delaware  limited  liability  company
By:     Emeritus  Realty  Corporation,  a  Nevada corporation, its sole member
     By
     Name
     Its

EMERITUS  REALTY  III,  LLC,  a  Delaware  limited  liability  company
By:     Emeritus  Realty  Corporation,  a  Nevada  corporation,  its sole member
     By:
     Name:
     Its:

EMERITUS  REALTY  V,  LLC,  a  Delaware  limited  liability  company
By:     Emeritus  Realty  Corporation,  a  Nevada  corporation,  its sole member
     By
     Name
     Its


<PAGE>

ESC-PORT  ST.  RICHIE,  LLC,  a  Washington  limited  liability  company
By:     Emeritus  Realty  Corporation,  a  Nevada  corporation,  its sole member
     By
     Name
     Its

EMERITUS  REALTY  II,  LLC,  a  Delaware  limited  liability  company
By:     Emeritus  Realty  Corporation,  a  Nevada  corporation,  its sole member
     By
     Name
     Its

EMERITUS  REALTY  PUYALLUP,  LLC,  a  Delaware  limited  liability  company
By:     Emeritus  Realty  Corporation,  a  Nevada  corporation,  its sole member
     By
     Name
     Its

EMERITUS  REALTY  BOZEMAN,  LLC,  a  Delaware  limited  liability  company
By:     Emeritus  Realty  Corporation,  a  Nevada  corporation,  its sole member
     By
     Name
     Its

EMERITUS  REALTY  XIV,  LLC,  a  Delaware  limited  liability  company
By:     Emeritus  Realty  Corporation,  a  Nevada  corporation,  its sole member
     By
     Name
     Its

OPERATORS:

EMERITUS  PROPERTIES  III,  INC.,  a  Washington  corporation
By
Name
Its

EMERITUS  PROPERTIES  V,  INC.,  a  Washington  corporation
By
Name
Its

EMERITUS  PROPERTIES  II,  INC.,  a  Washington  corporation
By
Name
Its

ESC-NEW  PORT  RICHEY,  LLC,  a  Washington  limited  liability  company
By:     Emeritus  Corporation,  a  Washington  corporation
     By
     Name
     Its

ESC-BOZEMAN,  LLC,  a  Washington  limited  liability  company
By:     Emeritus  Corporation,  a  Washington  corporation
     By
     Name
     Its

EMERITUS  PROPERTIES  XIV,  LLC,  a  Washington  limited  liability  company
By:     Emeritus  Corporation,  a  Washington  corporation
     By
     Name
     Its

MANAGER:

EMERITUS  CORPORATION,  a  Washington  corporation


By
Name
Its


<PAGE>

                                   EXHIBIT R-1

                                    LICENSES

                                    Attached.


<PAGE>

                                   EXHIBIT R-2

                                   DISCLOSURES
                                      None.



</TEXT>
</DOCUMENT>
