INTERCREDITOR AGREEMENT

THIS INTERCREDITOR AGREEMENT (“Agreement”) is entered into effective as of the 3rd day of March, 2005 by and between HEALTH CARE REIT, INC., a Delaware corporation (“HCN”), and HEALTHCARE REALTY TRUST INCORPORATED, a Maryland corporation (“HRT”).

A.   HCN and certain HCN Affiliates, as hereinafter defined, lease to Emeritus Corporation, a Washington corporation, (“Emeritus”) the real property identified on Exhibit “A” attached hereto and made a part hereof (“ML Leased Property”) pursuant to an Amended and Restated Master Lease Agreement dated September 30, 2003 (“Master Lease”).

B.   HCN has made a loan to Emeritus in the principal amount of $25,800,000 (“Loan”) pursuant to an Amended and Restated Loan Agreement dated September 30, 2003 (“Loan Agreement”) as evidenced by an Amended and Restated Note dated September 30, 2003 (“Note”). The Loan is secured by an Amended and Restated Leasehold Mortgage/Deed of Trust, Security Agreement, Assignment of Lease and Rents, Financing Statement and Fixture Filing granted by Emeritus to HCN dated effective as of September 30, 2003 with respect to the ML Leased Property (“ML Leasehold Mortgage”) granting HCN an interest in the leasehold estate of Emeritus arising under the Master Lease.

C.   HCN has agreed to sell and HRT has agreed to purchase the Note and take an assignment of the Loan Documents, as defined below.

D.   In connection with the sale of the Note, HCN and HRT have agreed to enter into this Agreement to clarify their respective rights.

NOW THEREFORE, to induce HCN to sell the Note and assign the Loan Documents to HRT, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.   Definitions . As used in this Intercreditor Agreement (this “Agreement”), the following terms shall have the following meanings (with terms defined above having the meanings indicated):

“ Affiliate ” means HCRI Mississippi Properties, Inc., a Mississippi corporation; HCRI Massachusetts Properties Trust II, a Massachusetts business trust; and HCRI Texas Properties, Ltd., a Texas limited partnership.

“ Bankruptcy Code ” means the United States Bankruptcy Code set forth in 11 U.S.C. §101, et seq., as amended from time to time.

“ HRT Collateral ” means the leasehold estate of Emeritus arising under the Lease in the Leased Property, and any other property of Emeritus located upon or held in connection with the Leased Property in which HRT has a security interest, however created as of the date hereof.

“ HRT Debt ” means those obligations, liabilities and indebtedness arising under the Loan Documents, as amended from time to time.

“ Indefeasibly Satisfied ” means receipt of payment in full in cash followed by the passage of a period of 91 days from such payment in which no challenge to such payment as a preference or other impermissible payment has been made by any person, or upon the dismissal, withdrawal or final ruling against such a challenge, together with the termination of all further commitments of Landlord or HRT, as the case may be, to lend money to Emeritus in connection with the Leased Property.

“ Insolvency Event ” means the following:

[1]   Emeritus commences any case, proceeding or other action (i) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (ii) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or Emeritus making a general assignment for the benefit of its creditors; or

[2]   there is commenced against Emeritus any case, proceeding or other action of a nature referred to in clause [1] above that (i) results in the entry of an order for relief or any such adjudication or appointment or (ii) remains undismissed, undischarged or unbonded for a period of 60 days; or

[3]   there is commenced against Emeritus any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief and which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry of such order; or

[a]   Emeritus takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in any of clauses [1], [2] or [3] above; or

[b]   Emeritus generally is not paying, or is unable to pay, or admits in writing its inability to pay, its debts as they become due.

“ Landlord ” means HCN and each Affiliate, jointly and severally.

“ Landlord Collateral ” means the following described property located at a Leased Property, or arising in connection with the operation of the Leased Property, whether now owned or hereafter acquired by Tenant or Subtenant to secure the payment and performance of the Landlord Obligations:

[1]   All machinery, furniture, equipment, trade fixtures, appliances, inventory and all other goods (as “equipment”, “inventory” and “goods” are defined for purposes of Article 9 (“Article 9”) of the Uniform Commercial Code as adopted in Ohio) and any leasehold interest of Tenant or any Subtenant in any of the foregoing, including, without limitation, those items which are to become fixtures or which are building supplies and materials to be incorporated into any improvement or fixture.

[2]   All accounts, contract rights, general intangibles, instruments, documents, and chattel paper [as “accounts”, “contract rights”, “general intangibles”, “instruments”, “documents”, and “chattel paper”, are defined for purposes of Article 9] now or hereafter arising.

[3]   All franchises, permits, licenses, operating rights, certifications, approvals, consents, authorizations and other general intangibles, including, without limitation, certificates of need, state health care facility licenses, and Medicare and Medicaid provider agreements, to the extent permitted by law.

[4]   Unless expressly prohibited by the terms thereof, all contracts, agreements, contract rights and materials relating to the design, construction, operation or management of any improvements, including, but not limited to, plans, specifications, drawings, blueprints, models, mock ups, brochures, flyers, advertising and promotional materials and mailing lists.

[5]   All subleases, occupancy agreements, license agreements and concession agreements, written or unwritten, of any nature, now or hereafter entered into, and all right, title and interest of Tenant there under, including, without limitation, those certain Subleases dated as of the Effective Date, by and between Tenant, as Sublandlord, and each Subtenant, as Subtenant; and including, without limitation, Tenant’s right, if any, to cash or securities deposited there under whether or not the same was deposited to secure performance by the subtenants, occupants, licensees and concessionaires of their obligations there under, including the right to receive and collect the rents, revenues, and other charges there under.

[6]   All ledger sheets, files, records, computer programs, tapes, other electronic data processing materials, and other documentation.

[7]   The products and proceeds of the preceding listed property, including, without limitation, cash and non cash proceeds, proceeds of proceeds, and insurance proceeds.

“ Landlord Obligations ” means all obligations, liabilities and indebtedness of every nature of Emeritus from time to time owed to Landlord under the Lease, whether now existing or hereafter incurred or created, and all fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from time to time hereafter owing, due or payable, whether before or after the commencement of an Insolvency Event (including, without limitation, interest or rent accruing thereon after the commencement of an Insolvency Event, without regard to whether or not such interest is an allowed claim.

“ Lease ” means the Master Lease, as the same may be hereafter modified, supplemented, amended, restated, extended, renewed or increased.

“ Leased Property ” means individually and collectively each ML Leased Property.

“ Loan Documents ” means collectively the Note, the ML Leasehold Mortgage, and the Loan Agreement, as the same may be hereafter modified, supplemented, amended, restated, extended, renewed or increased.

“ Subtenant ” means each of Texas ESC Lubbock, L.P., a Washington limited partnership; and Painted Post Properties, Inc., a Washington corporation.

“ Tenant ” means Emeritus Corporation, a Washington corporation.

(a)   HRT hereby agrees that the HRT Debt shall be subordinated to the Landlord Obligations. Except as provided in 2(b), no payment shall be made by or on behalf of Emeritus for or on account of the HRT Debt, and HRT shall not take or receive from Emeritus, directly or indirectly, in cash or other property or by setoff or in any other manner, payment of all or any of the HRT Debt, if any, so long as any sums in respect to the Landlord Obligations shall then be due and payable. If there is any conflict between the Lease and the Loan Documents, the terms of the Lease shall govern.

(b)   Notwithstanding any provision contained herein, as long as no monetary Event of Default has occurred and is continuing under the Lease, HRT may (i) receive all payments as and when due on the HRT Debt pursuant to the HRT Documents, including without limitation, the final payment due at maturity, (ii) allow Emeritus to prepay the Note in full provided the funds for the prepayment are not Landlord Collateral, and (iii) may bring legal proceedings against Emeritus under the Note, but shall not pursue or prosecute any right or remedy which HRT may have as a secured party or otherwise under the ML Leasehold Mortgage.

3.   Subordination of Liens on Landlord Collateral . HRT hereby agrees that all of its rights with respect to the Landlord Collateral shall be in all respects subject and subordinate to the rights of Landlord with respect to such Landlord Collateral in connection with and on account of the Landlord Obligations. HRT agrees to refrain from challenging the validity, enforceability, priority or perfection of Landlord’s security interests and liens in the Landlord Collateral. The foregoing subordination shall be effective irrespective of: (a) the time, order, manner or method of creation, attachment or perfection of the respective security interests, liens and/or other rights granted to HRT or Landlord, or any lapse of perfection or attachment; (b) the time or manner of the filing of their respective financing statements; (c) whether HRT or Landlord or any bailee or agent of either party holds possession of any or all of the property or assets of Emeritus; (d) the dating, execution or delivery of any agreement, document or instrument granting HRT or Landlord security interests and/or liens in or on any or all of the property or assets of Emeritus; (e) any amendment, modification, restatement, extension, renewal or increase to the Landlord Obligations or Lease or the creation of any new indebtedness which becomes a part of the Landlord Obligations or secured or evidenced by the Lease; and (f) any provision of the UCC or any other applicable law to the contrary.

4.   Adding and Removing Facilities from the Master Lease . Landlord may amend the Master Lease to include additional facilities without HRT’s consent, provided that Landlord has consented to Tenant amending the ML Leasehold Mortgage to include such additional facilities. Additionally, in the event Landlord desires to amend the Lease to remove a facility from the Master Lease, HRT shall release such facility upon payment by Emeritus of an amount mutually agreed to by HRT and Emeritus or a prorated amount of the then outstanding HRT Debt on a site by site basis, i.e. the release amount shall be equal to then outstanding HRT Debt divided by the number of facilities then in the Master Lease. Landlord shall provide HRT with a copy of any amendment to the Master Lease within five days of execution.

5.   Default Under Loan Documents . In the event of a default under the Loan Documents, HRT shall not have the right to accelerate the Loan and demand payment in full unless HRT has given Landlord notice of the default and Landlord has failed to cure such default as set forth in §8 hereof. If there is a conflict between the terms of the Lease and of the Loan Documents, the Lease shall prevail. Furthermore, provided Emeritus is paying all sums due under the Note, no Event of Default shall be deemed to exist under the Loan Documents so long as HCN has not provided notice of an Event of Default under the Lease.

6.   Default Under Lease . If an Event of Default, as defined in the Lease, exists under the Lease, Landlord shall have all remedies available in accordance with and under the terms of the Lease, but only after Landlord has given HRT notice of the default and HRT has failed to cure such default as set forth in §8 hereof.

(a)   HRT will furnish Landlord with a copy of any default notice sent to Emeritus in respect of the HRT Debt simultaneously with giving such notice to Emeritus.

(b)   Landlord will furnish HRT with a copy of any default notice sent to Tenant in respect of the Landlord Obligations simultaneously with giving such notice to Emeritus.

(c)   The failure of either HRT or Landlord to deliver any notice of default to the other party shall n