FIRST
AMENDMENT TO LOAN AGREEMENT


(Amended
and Restated)







THIS FIRST AMENDMENT TO LOAN
AGREEMENT (Amended and Restated) (this “Amendment”) is made as of April 25, 2008, by and among the twenty-three (23) Delaware
limited liability companies or limited partnerships listed on Schedule A attached
hereto and made a part hereof (together with their respective successors and
assigns, the “Borrowers”, and individually, a “Borrower”), and CAPMARK BANK, a
Utah industrial bank (together with its successors and assigns,
“Lender”).




RECITALS




A.           Borrowers
and other borrower parties obtained forty-eight (48) loans from Lender in the
aggregate principal sum of $90,000,000.00, as evidenced and governed by that
certain Loan Agreement dated August 31, 2005 (the “Original Loan
Agreement”).




B.           Borrowers
subsequently requested that the loans evidenced and governed by the Original
Loan Agreement be consolidated into two (2) loans and increased to an aggregate
of $140,000,000.00, with one note for $132,000,000.00 and the second for
$8,000,000.00, and Lender agreed to such consolidation and increase upon certain
conditions which were set forth in an Amended and Restated Loan Agreement (the
“Loan Agreement”) dated February 28, 2007.




C.           The
$8,000,000.00 note has been paid in full.




D.           Borrower
has requested, and Lender has agreed, to revise such Loan Agreement on the terms
and conditions hereinafter set forth.




AGREEMENT




NOW, THEREFORE, in
consideration of Ten and No/100 Dollars ($10.00) and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, it is hereby
agreed as follows:




1.           PotentialRelease
of Certain Borrowers and Facilities from Agreement.




Upon
receipt of a principal reduction of $99,260,660.00, resulting in an outstanding
balance of $32,739,340.00 under the $132,000,000.00 note, Lender shall release
the specific Borrowers listed on Exhibit B (the “Released Borrowers”), attached
hereto and incorporated herein by reference, from the Loan Agreement and other
documents relating to the Loan Agreement.  Upon such release, the Loan
Agreement shall be automatically amended so that the term “Borrowers” shall
refer only to the following entities:




a.           Fretus
Investors Houston LLC (Champion Oaks Facility),




b.           Fretus
Investors Greenwood LLC (Greenwood Facility),




c.           Fretus
Investors San Antonio LLC (Woodbridge Estates Facility),




1


d.           Fretus
Investors El Paso LLC (Cielo Vista Facility), and




e.           Fretus
Investors Indianapolis LLC (Meridian Oaks Facility).




All
Mortgages or Deeds of Trust and Security Agreements made by the Released
Borrowers shall be referred to as the “Released
Mortgages”.   Upon such release, all obligations under this Loan
Agreement and the Loan Documents related to the Released Borrowers and the
Released Mortgages shall be deemed fully satisfied and the properties encumbered
shall be fully released from the liens created by the Released Mortgages and
Loan Documents.




2.           Sale of
Certain Facility.  Borrowers have
informed Lender that the Facility known as “Meridian Oaks” in Indianapolis,
Indiana is intended to be sold prior to the Maturity Date under the
Note.  So long as no Event of Default exists at the time of such sale,
Lender shall consent to a sale of Meridian Oaks in consideration of a repayment
of principal to Lender of $3,200,000.00 from the sales proceeds of the
sale.  Upon payment of $3,200,000.00, Lender shall release the
mortgage encumbering Meridian Oaks as well as release the owner of Meridian
Oaks, Fretus Investors Indianapolis LLC, from the Loan Agreement and other
related Loan Documents.




3.           Appraisals.The following is
hereby added as Section 3.34 of the Loan Agreement:




Lender
has ordered new appraisals on four (4) of the Facilities, namely:




1.           Champion
Oaks Facility,


2.           Greenwood
Facility,


3.           Woodbridge
Estates Facility, and


4.           Cielo
Vista Facility.




Borrowers
shall be responsible for any and all costs associated with such
appraisals.  Should the four (4) appraisals reflect a loan to value
ratio greater than 75%, Borrowers shall pay down the Loan within 15 days of
notice from Lender in an amount sufficient to result in a loan to value ratio of
75% or less.




4.           Incorporation
of Loan Agreement.  Except as amended
herein, the Loan Agreement is in full force and effect and the terms and
conditions of the Loan Agreement are incorporated herein by
reference.




IN WITNESS WHEREOF, Borrowers
and Lender have caused this Amendment to be properly executed by their
respective duly authorized representatives as of the date first above
written.




PLEASE BE ADVISED THAT ORAL
AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT ARE UNENFORCEABLE UNDER WASHINGTON
LAW.




2


CAPMARK BANK,a Utah
industrial bank








By:           ___________________________(Seal)


Name:                      ___________________________


Its:           ___________________________





3


FRETUS
Investors Chandler LLC


FRETUS
Investors Glendale LLC


FRETUS
Investors Mesa LLC


FRETUS
Investors Orange Park LLC


FRETUS
Investors Jacksonville LLC


FRETUS
Investors Melbourne LLC


FRETUS
Investors Orlando LLC


FRETUS
Investors Winter Springs LLC


FRETUS
Investors Fort Wayne LLC


FRETUS
Investors Indianapolis LLC


FRETUS
Investors Greenwood LLC


FRETUS
Investors Las Vegas LLC


each a Delaware limited liability
company





By:           FRETUS
Investors LLC, a Washington limited liability company


Its:           Manager





By:           Emeritus
Corporation, a Washington corporation


Its:           Administrative
Member











By:           /s/ Eric
Mendelsohn


Eric Mendelsohn


Its:           Senior
Vice President Corporate Development





4


FRETUS Investors Austin LP, a
Delaware limited partnership


By:           Duval
Oaks Investors LLC, a Delaware limited liability company


Its:           General
Partner


FRETUS Investors Dallas LP, a
Delaware limited partnership


By:           Kingsley
Oaks Investors LLC, a Delaware limited liability company


Its:           General
Partner


FRETUS Investors El Paso LP, a
Delaware limited partnership


By:           Village
Oaks Cielo Vista Investors LLC, a Delaware limited liability
company


Its:           General
Partner


FRETUS Investors Farmers Branch
LP, a Delaware limited partnership


By:           Village
Oaks Farmers Branch Investors LLC, a Delaware limited liability
company


Its:           General
Partner


FRETUS Investors Fort Worth
LP, a Delaware limited partnership


By:           Tanglewood
Oaks Investors LLC, a Delaware limited liability company


Its:           General
Partner


FRETUS Investors Hollywood Park
LP, a Delaware limited partnership


By:           Village
Oaks Hollywood Park Investors LLC, a Delaware limited liability
company


Its:           General
Partner


FRETUS Investors Houston LP, a
Delaware limited partnership


By:           Champion
Oaks Investors LLC, a Delaware limited liability company


Its:           General
Partner


FRETUS Investors Memorial Oaks
Houston LP, a Delaware limited partnership


By:           Memorial
Oaks Investors LLC, a Delaware limited liability company


Its:           General
Partner


FRETUS Investors Plano LP, a
Delaware limited partnership


By:           Collin
Oaks Investors LLC, a Delaware limited liability company


Its:           General
Partner


FRETUS Investors San Antonio
LP, a Delaware limited partnership


By:           Northwest
Oaks Investors LLC, a Delaware limited liability company


Its:           General
Partner


FRETUS Investors Sugar Land
LP, a Delaware limited partnership


By:           Sugar
Land Investors LLC, a Delaware limited liability company


Its:           General
Partner





By:           FRETUS
Investors LLC, a Washington limited liability company


Its:           Managing
Member





By:           Emeritus
Corporation, a Washington corporation


Its:           Administrative
Member











By:           /s/
Eric
Mendelsohn


Eric Mendelsohn


Its:           Senior
Vice President Corporate Development





5


SCHEDULE
A





[List of
Borrowers]








FRETUS
      Investors Chandler LLCFRETUS
      Investors Glendale LLCFRETUS
      Investors Mesa LLCFRETUS
      Investors Orange Park LLCFRETUS
      Investors Jacksonville LLCFRETUS
      Investors Melbourne LLCFRETUS
      Investors Orlando LLCFRETUS
      Investors Winter Springs LLCFRETUS
      Investors Fort Wayne LLCFRETUS
      Investors Indianapolis LLCFRETUS
      Investors Greenwood LLCFRETUS
      Investors Las Vegas LLCFRETUS
      Investors Austin LPFRETUS
      Investors Dallas LPFRETUS
      Investors El Paso LPFRETUS
      Investors Farmers Branch LPFRETUS
      Investors Fort Worth LPFRETUS
      Investors Hollywood Park LPFRETUS
      Investors Houston LPFRETUS
      Investors Memorial Oaks Houston LPFRETUS
      Investors Plano LPFRETUS
      Investors San Antonio LPFRETUS
      Investors Sugar Land LP








6


SCHEDULE
B





[List of
Borrowers Being Released]








FRETUS
      Investors Chandler LLCFRETUS
      Investors Glendale LLCFRETUS
      Investors Mesa LLCFRETUS
      Investors Orange Park LLCFRETUS
      Investors Jacksonville LLCFRETUS
      Investors Melbourne LLCFRETUS
      Investors Orlando LLCFRETUS
      Investors Winter Springs LLCFRETUS
      Investors Fort Wayne LLCFRETUS
      Investors Las Vegas LLCFRETUS
      Investors Austin LPFRETUS
      Investors Dallas LPFRETUS
      Investors Farmers Branch LPFRETUS
      Investors Fort Worth LPFRETUS
      Investors Hollywood Park LPFRETUS
      Investors Memorial Oaks Houston LPFRETUS
      Investors Plano LPFRETUS
      Investors Sugar Land LP





7