PROMISSORY NOTE

FOR VALUE RECEIVED, EMERITUS CORPORATION, a corporation organized under the laws of the State of Washington (“Borrower”), shall pay to the order of HEALTHCARE REALTY TRUST INCORPORATED, a corporation organized under the laws of the State of Maryland (“Lender”), the principal sum of Ten Million Eight Hundred Thousand and 00/100 Dollars ($10,800,000.00), with interest on so much thereof as shall from time to time be outstanding at the rate of interest set forth below, until fully paid. This Note is given pursuant to that certain Loan Agreement of even date herewith among Borrower and Lender, as amended from time to time (the “Loan Agreement”) and is subject to the provisions thereof. The definitions in the Loan Agreement shall be applicable to any capitalized terms herein that are not otherwise defined.

1.   Definitions.

“Business Day” means any day which is not a Saturday or Sunday or a public holiday under the laws of the United States of America or the State of Washington.

“Closing Date” means the date of this Note.

“Collateral Document” or “Collateral Documents” means individually and collectively the Mortgage and any other document providing security for or guarantee of repayment of this Note.

“Commencement Date” means [i] the Closing Date if the Closing Date occurs on the first day of a month or [ii] the first day of the month after the Closing Date if the Closing Date occurs on any day other than the first day of the month.

“Default Rate” means 12.50%, subject to the provisions of §21.

“Event of Default” has the meaning set forth in §8.

“Lease” has the meaning set forth in the Loan Agreement.

“Loan” means all indebtedness evidenced by this Note or otherwise due pursuant to the Loan Agreement or the Collateral Document.

“Maturity Date” means June 30, 2008.

“Mortgage” means the Leasehold Mortgage/Deed of Trust, Security Agreement, Assignment of Leases and Rents, Financing Statement and Fixture Filing of even date herewith granted by Borrower to secure the indebtedness evidenced by this Note.

“State” means the State of Washington.

2.   Interest Rate.

(a)   Initial Rate. Interest shall accrue on the principal amount outstanding hereunder at the rate of 10% per annum.

(b)   Default Rate. After the occurrence and during the continuance of an Event of Default, Borrower shall pay interest on this Note, and on any judgment on this Note, at the Default Rate.

(c)   Computation Method. All interest rates shall be calculated based on the actual number of days elapsed over a 365-day year (365/365 method).

3.   Payments.

(a)   Commencing on the Commencement Date and on the first day of each month thereafter, Borrower shall make monthly payments of interest only in arrears sufficient to pay all interest accrued pursuant to §2 hereof; provided, however, if the Commencement Date is the first day of a month then, the first payment shall not be due until the first day of the first month after the Commencement Date.

(b)   On the Maturity Date, Borrower shall make a balloon payment equal to the outstanding balance of this Note including the outstanding principal balance, all accrued and unpaid interest, and all charges, expenses and other amounts payable by Borrower to Lender hereunder.

4.   Method and Place of Payment. Borrower shall make all payments on this Note to Healthcare Realty Trust Incorporated, P.O. Box 100894, Atlanta, GA 30384-0894, or at such other place as the holder hereof may designate in writing to Borrower in accordance with the provisions of Section 17, or by wire transfer as hereinafter provided. The failure of Lender to provide such written notice to Borrower will not relieve Borrower of its obligations under this Note. Borrower shall make all payments in lawful money of the United States of America, and may make payments by wire transfer of immediately available funds to :

Name:     Healthcare Realty Trust Incorporated

Bank:     Bank of America, N.A.

ABA NO.:    111-000-012

Account No.:    3751 1997 46

Attention:    Rick Langreck (615) 269-8175

Address:    Bank of America, N.A.

901 Main Street

Dallas, TX 75202

Bank of America, N.A.

TX1-099-03-04

PO Box 831153

Dallas, TX 75283

5.   Prepayment. Borrower shall have the privilege of prepaying this Note in whole or in part at any time upon at least 9 months prior written notice to Lender; provided, however, no such prepayment shall be permitted prior to January 1, 2007 without the prior written consent of Lender, which consent may be withheld in the sole discretion of Lender.

6.   Late Charge. Borrower acknowledges that any default in any payment due under this Note will result in loss and additional expense to Lender in handling such delinquent payments and meeting Lender’s other financial obligations. Because such loss and additional expense is extremely difficult and impractical to ascertain, Borrower agrees that if any payment hereunder (other than the final payment on maturity) is not paid within 10 days after the due date, Borrower shall pay, as a reasonable estimate of such loss and expense, and in addition to other amounts due hereunder, a late charge equal to the lesser of [i] 5% of the amount of the overdue payment, or [ii] the maximum amount permitted by applicable law.

7.   Application of Payments. Unless Lender elects otherwise, in its sole discretion, all payments and other amounts received by Lender pursuant to this Note shall be credited as follows: [i] first to any charges, costs, expenses and fees payable by Borrower under this Note, the Loan Agreement, the Mortgage, or incurred by Lender for the protection of any collateral securing the payment of this Note, if not paid by Borrower by the due date after the expiration of any applicable grace period; [ii] second to interest on the foregoing amounts at the Default Rate from the due date or date of payment by Lender, as the case may be; [iii] third to accrued but unpaid interest on this Note; [iv] fourth, to the principal amount outstanding; and [v] the balance, if any, to Borrower.

8.   Default. Failure to pay any amount owed under this Note within ten (10) days after such payment is due shall constitute an Event of Default hereunder. The occurrence of an Event of Default under the Loan Agreement or Mortgage shall be an Event of Default hereunder.

9.   Acceleration. Upon the occurrence of any Event of Default, in addition to all other remedies under the Loan Agreement, Mortgage, any other security for or guarantee of this Note, and at law or in equity, at the option of Lender [i] the outstanding principal balance of this Note and all accrued and unpaid interest thereon

and all other amounts payable by Borrower to Lender shall be immediately due and payable, and [ii] all such amounts shall bear interest at the Default Rate from the date of the Event of Default until paid. Lender may exercise either or both options without notice or demand of any kind.

10.   Governing Law. This Note shall be governed by and construed in accordance with the internal laws of the State, without giving effect to the conflict of laws rules thereof.

11.   Time is of the Essence. Time is of the essence in the payment of this Note. All grace periods in the Loan Agreement and any Collateral Document that apply to a default shall run concurrently.

12.   Holidays. If any installment of this Note becomes due on a day which is not a Business Day, Borrower