SECOND AMENDMENT TO LEASE AGREEMENT


          This  Second Amendment to Lease Agreement ("Second Amendment") is made
effective  as  of  June 30, 2003 (the "Effective Date") by and between HCRI EDDY
POND PROPERTIES TRUST, a business trust organized under the laws of the State of
Massachusetts  ("Landlord"),  and  EMERITUS CORPORATION, a corporation organized
under  the  laws  of  the  State  of  Washington  ("Tenant").
                                 R E C I T A L S
A.     Effective  as  of  February  26, 1996, LM Auburn Assisted Living LLC ("LM
Auburn"),  as  landlord,  and  Tenant  entered  into  a  Lease Agreement ("Lease
Agreement") of certain real property known as The Woods at Eddy Pond and located
     at  667  Washington  Street, Auburn, Massachusetts ("Property").  Effective
September  30, 1997, the Lease Agreement was amended pursuant to a certain First
Amendment  to Lease (hereinafter the Lease Agreement, as amended, referred to as
the  "Lease").
B.     As  of  June  30,  2003,  LM  Auburn  has sold the Property to ESC-Auburn
Acquisition,  LLC,  which  in turn immediately sold the Property to Landlord and
Landlord  acquired  all  of  the  landlord's  interest  in  the  Lease.
C.     Landlord and Tenant desire to further amend the Lease with respect to the
     Basic  Rent  and  as  otherwise  set  forth  herein.
          NOW,  THEREFORE,  in  consideration of the premises and for other good
and  valuable  consideration,  the  receipt  and sufficiency of which are hereby
acknowledged,  Landlord  and  Tenant  agree  as  follows:
1.     Rent.    3.1,  3.1.1,  3.1.2, Basic Rent, 3.3 Rent Increaser and 3.4 Rent
       ----
During  Renewal  Term  are  hereby  amended  in  their  entirety  as  follows:
     3.1     Basic Rent.  Tenant shall pay Landlord basic rent ("Basic Rent") in
             ----------
advance  in  consecutive  monthly  installments payable on the first day of each
month  during  the  Initial  Lease Term commencing on the Effective Date of this
Second Amendment.  If the Effective Date is not the first day of a month, Tenant
shall pay Landlord Basic Rent on the Effective Date for the partial month, i.e.,
for  the  period  commencing on the Effective Date and ending on the last day of
the  month  in which the Effective Date occurs.  The Basic Rent payable from and
after  the  Effective  Date  for  the  balance  of  the Initial Lease Term is as
calculated  on  the  Rent  Schedule  attached  hereto  as  Schedule 1.  The Rent
Schedule  accurately reflects the Base Rent for the first Lease Year and is only
an  example  of the Base Rent for the remaining Lease Years.  The Basic Rent for
each  Renewal  Term  will  be  determined  in  accordance  with  3.7.
Commencing  on  July 1, 2004 and on the first day of each July thereafter during
the  Initial Term and each Renewal Term, Landlord shall calculate the Basic Rent
based  upon  the applicable increaser as shown on Schedule 1 and issue a revised
Rent  Schedule.  Until  Tenant  receives  a  revised Rent Schedule, Tenant shall
continue  to make payments in accordance with the then applicable Rent Schedule.
For  purposes  of  calculating  the  annual  increase  in Base Rent, as shown on
Schedule  1,  the  "CPI"  means the United States Department of Labor, Bureau of
Labor  Statistics  Revised  Consumer  Price  Index  for  All  Urban  Consumers
(1982-1984=100),  U.S.  City  Average,  All  Items,  or,  if  that  index is not
available  at  the  time in question, the index designated by such Department as
the  successor  to  such index, and if there is no index so designated, an index
for  an  area  in  the United States that most closely corresponds to the entire
United  States,  published  by  such  Department,  or  if  none,  by  any  other
instrumentality  of  the  United States.  In no event shall the CPI be less than
zero  (0).
3.2     Additional  Rent.  In addition to Basic Rent, Tenant shall pay all other
        ----------------
amounts, liabilities, obligations and Impositions which Tenant assumes or agrees
to  pay  under this Lease including any fine, penalty, interest, charge and cost
which  may  be  added for nonpayment or late payment of such items (collectively
the "Additional Rent").  Hereinafter the Additional Rent together with the Basic
Rent  referred  to  collectively  as  "Rent".
3.3     Place  of  Payment  of  Rent.  Tenant shall make all payments of Rent to
        ----------------------------
Landlord  by electronic wire transfer in accordance with the wiring instructions
set  forth  in  Exhibit  N attached hereto, subject to change in accordance with
other  written  instructions  provided  by  Landlord  from  time  to  time.
3.4     Rent During Renewal Term.  Effective as of the first day of each Renewal
        ------------------------
Term,  Landlord  shall  calculate  Basic Rent for the Renewal Term in accordance
with  2.1(c)(2) of the Commitment and shall issue a new Rent Schedule reflecting
the  Basic  Rent adjustment.  Until Tenant receives a revised Rent Schedule from
Landlord, Tenant shall for each month [i] continue to make installments of Basic
Rent  according  to  the  Rent  Schedule in effect on the day before the Renewal
Date;  and  [ii] within 10 days following Landlord's issuance of an invoice, pay
the  difference  between the installment of Basic Rent paid to Landlord for such
month  and the installment of Basic Rent actually due for such month as a result
of  the  renewal  of  the  Lease.  For  purposes hereof, the Commitment shall be
defined  as the Commitment Letter dated March 5, 2002 as modified by the Project
Approval  Letter  dated  March  5,  2002.
2.     Repair or Restoration after Major Casualty.   10.1 of the Lease is hereby
       ------------------------------------------
     amended  in  its  entirety  to  read  as  follows:
     10.1     Repair or Restoration after Major Casualty.  In the event that any
              ------------------------------------------
part  of the Improvements or the Personal Property shall be damaged or destroyed
by  fire  or  other  casualty  (any such event being called a "Major Casualty"),
Tenant  shall  promptly,  after  receipt of Landlord's approval of the Plans and
Specifications  as  set  forth  below,  replace,  repair and restore the same as
nearly as possible to its condition immediately prior to such Major Casualty, in
accordance  with  all  of  the  terms,  covenants  and  conditions  and  other
requirements  of  this  Lease  and  any mortgage applicable in the event of such
Major  Casualty.  If,  pursuant  to  this  10, Tenant shall be obligated to make
repairs,  the  Premises  shall  be  so  replaced, repaired and restored as to be
substantially the same character as prior to such Major Casualty.  The Plans and
Specifications  for such restoration shall be first submitted to and approved in
writing  by  Landlord,  which  approval  shall  not  be  unreasonably  withheld.
Landlord  may  elect  to  retain,  at  its  expense,  an  independent architect,
reasonably  approved  by  Tenant, who shall oversee such repairing, restoring or
replacing.  Tenant  covenants that it will give to Landlord prompt notice of any
casualty in excess of $150,000.00 affecting the Premises or any portion thereof.
3.     Failure  by  Landlord  to  Complete  Repairs.   10.3 is hereby amended to
       --------------------------------------------
delete  the  first  and  second  sentences  thereof.
4.     Termination.   10.4  is  hereby  deleted  in  its  entirety.
       -----------
5.     Abatement  of  Rent.   10.7  is  hereby  deleted  in  its  entirety.
       -------------------
6.     Events  of Default.   12.1.1 is hereby amended in its entirety to read as
       ------------------
follows:
     12.1.1     Events  of  Default.  Failure  by  Tenant  to  pay  in  full any
                -------------------
installment  of  Basic Rent, any Additional Rent or any other monthly obligation
payable  by  Tenant  under  this Lease within 10 days after such payment is due.
7.     Landlord's  Remedies.   13.1 is hereby amended in its entirety to read as
       --------------------
follows:
     13.1     Landlord's Remedies.  If an Event of Default shall occur, Landlord
              -------------------
may,  at its option, give to Tenant a written notice terminating this Lease upon
a  date specified in such notice and upon the date specified in said notice, the
term and estate hereby vested in Tenant shall cease and any and all other right,
title  and  interest  of  Tenant  hereunder shall likewise cease without further
notice  or  lapse  of time, as fully and with like effect as if the entire Lease
Term  had  elapsed,  but  Tenant  shall  continue  to  be  liable to Landlord as
hereinafter  provided.
8.     Notices.  16  is  hereby  amended to provide that notices to the Landlord
       -------
and  Tenant  shall  be  delivered  as  follows:
To  Landlord:     HCRI  Eddy  Pond  Properties  Trust
One  SeaGate,  Suite  1500
P.O.  Box  1475
Toledo,  OH  43603-1475
with  a  copy  to:     Oksana  M.  Ludd
Shumaker,  Loop  &  Kendrick,  LLP
1000  Jackson
Toledo,  OH  43624
To  Tenant:     Emeritus  Corporation
3131  Elliott  Avenue,  Suite  500
Seattle,  WA  98121
with  a  copy  to:     Randi  S.  Nathanson
The  Nathanson  Group  PLLC
1520  Fourth  Avenue,  6th  Floor
Seattle,  WA  98101
9.     Subordination.   17.4  is  hereby  amended  to  provide  that  any
       -------------
non-disturbance  agreement  shall  be  obtained  at  Tenant's expense and not at
       ------
Landlord's  expense.
10.     Financial  Statements.   20  is  hereby  amended  to provide that Tenant
        ---------------------
shall  deliver  the  information  as  set  forth  on  Exhibit  O.
11.     Compliance  with  Loan  Documents.  Tenant acknowledges that Landlord is
        ---------------------------------
acquiring  the  Property  subject  to a certain Open-End Mortgage, Assignment of
Leases  and  Rents,  Security  Agreement  and  Fixture  Filing  Statement in the
original  principal  sum  of  $16,500,000.00  to  Teachers Insurance and Annuity
Association of America dated September 25, 1997 and recorded in Book 19222, Page
69  ("Mortgage")  and  that Landlord will assume the obligation set forth in the
Mortgage  and  Loan  Documents, as defined in the Mortgage.  Tenant has reviewed
the  Loan  Documents  and  is  familiar  with  the terms and conditions thereof.
Tenant  agrees  to  comply  with  the terms and conditions set forth in the Loan
Documents  in connection with its operation of the Facility and shall not create
any  condition  that  would  cause  a  default  under  any  such Loan Documents.
Tenant's  failure  to comply with the Loan Documents and to cure same within any
applicable  cure  period provided for in the Loan Documents shall be an event of
default  under  this  Lease,  as  amended  from  time  to  time.
12.     Affirmation.  Except  as  specifically amended by this Second Amendment,
        -----------
the  terms  and  provisions of the Lease, as amended by the First Amendment, are
hereby  affirmed  and  shall  remain  in  full  force  and  effect.
13.     Binding Effect.  This Second Amendment will be binding upon and inure to
        --------------
the  benefit  of  the  successors  and  permitted assigns of all parties hereto.
14.     Further Modification.  The Lease may be further modified only by writing
        --------------------
signed  by  both  Landlord and Tenant and approved by the holder of any Facility
Mortgage  if  and to the extent required by the terms of such Facility Mortgage.
15.     Counterparts.  This  Second  Amendment  may  be  executed  in  multiple
        ------------
counterparts,  each  of  which  shall  be  deemed  an  original.
            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

<PAGE>

          IN  WITNESS  WHEREOF,  Tenant  and  Landlord have executed this Second
Amendment  as  a  Massachusetts  instrument  under seal effective as of the date
first  set  forth  above.
     EMERITUS  CORPORATION
     By:   Raymond  R.  Brandstrom
       Title:  Vice  President  of  Finance
TENANT:     Tax  ID  No.:  91-1605464
     HCRI  EDDY  POND  PROPERTIES  TRUST
     By:  HCRI Massachusetts Properties, Inc., as Trustee, and not individually,
and  subject  to  the provisions of the Declaration of HCRI Eddy Pond Properties
Trust filed with the Secretary of the Commonwealth of Massachusetts and the City
Clerk  of  Boston
       By:  Erin  C.  Ibele
       Title:  V.P.  &  Corporate  Secretary
       By:
LANDLORD:       Title:  President  &  CFO



<PAGE>

                           SCHEDULE 1:  RENT SCHEDULE
EMERITUS  CORPORATION  -  AUBURN,  MA
-------------------------------------
HEALTH  CARE  REIT,  INC.
                                                  INITIAL TERM DATE     07/01/03
INITIAL  TERM     15     Yrs
                                       INITIAL TERM EXPIRATION DATE     06/30/18
                                         INITIAL INVESTMENT AMOUNT     9,000,000

                                                          RATE OF RETURN     N/A
(365/360  BASIS)
                                               INITIAL RATE OF RETURN     10.00%
                                                                          ------
INCREASER     (*)  ANNUAL  RENT  INCREASER IS EQUAL TO THE LESSER OF THREE TIMES
CPI  (BUT  NEVER  LESS  THAN  0) OR 25 BASIS POINTS.  THIS SCHEDULE WAS PREPARED
USING  THE  CPI  FOR  THE  PERIOD APRIL, 2002 TO APRIL, 2003 AND ASSUMED AS SUCH
GOING  FORWARD.  ACTUAL  INCREASERS  WILL  BE  REVIEWED AND CALCULATED ANNUALLY.

                                              INITIAL MONTHLY RENT     75,000.00

                                                ANNUAL INCREASER AMOUNT     0.00
  LEASE YEAR     DATES     ACTUAL CPI     *ESTIMATED INCREASER (BP) (LESSER OF 3
    TIMES THE CPI INCREASE OVER PRIOR YEAR OR 25 BP)     BEGINNING RENT RATE OF
              RETURN     MONTHLY RENT AMOUNT     ANNUAL RENT AMOUNT
                                     FROM     TO

                         06/30/03     06/30/03               10.00%     2,465.75
          1     07/01/03     06/30/04     N/A     N/A     10.00%     75,000.00
                                                                      900,000.00
          2     07/01/04     06/30/05     3.20%     0.25%     10.25%   76,875.00
                                                                      922,500.00
          3     07/01/05     06/30/06     3.20%     0.25%     10.50%   78,750.00
                                                                      945,000.00
          4     07/01/06     06/30/07     3.20%     0.25%     10.75%   80,625.00
                                                                      967,500.00
          5     07/01/07     06/30/08     3.20%     0.25%     11.00%   82,500.00
                                                                      990,000.00
          6     07/01/08     06/30/09     3.20%     0.25%     11.25%   84,375.00
                                                                    1,012,500.00
          7     07/01/09     06/30/10     3.20%     0.25%     11.50%   86,250.00
                                                                    1,035,000.00
          8     07/01/10     06/30/11     3.20%     0.25%     11.75%   88,125.00
                                                                    1,057,500.00
          9     07/01/11     06/30/12     3.20%     0.25%     12.00%   90,000.00
                                                                    1,080,000.00
         10     07/01/12     06/30/13     3.20%     0.25%     12.25%   91,875.00
                                                                    1,102,500.00
         11     07/01/13     06/30/14     3.20%     0.25%     12.50%   93,750.00
                                                                    1,125,000.00
         12     07/01/14     06/30/15     3.20%     0.25%     12.75%   95,625.00
                                                                    1,147,500.00
         13     07/01/15     06/30/16     3.20%     0.25%     13.00%   97,500.00
                                                                    1,170,000.00
         14     07/01/16     06/30/17     3.20%     0.25%     13.25%   99,375.00
                                                                    1,192,500.00
        15     07/01/17     06/30/18     3.20%     0.25%     13.50%   101,250.00
                                                                    1,215,000.00



<PAGE>
                          EXHIBIT N:  WIRE INSTRUCTIONS
                                       KeyBank
BANK:     Cleveland,  Ohio

ABA  NUMBER:     041001039

ACCOUNT  NAME:     Health  Care  REIT,  Inc.

ACCOUNT  NUMBER:     353321001011

NOTIFY:     Michael  A.  Crabtree

PHONE:     (419)  247-2800


<PAGE>
                      EXHIBIT O:  DOCUMENTS TO BE DELIVERED
          Tenant  shall  deliver  each  of  the  following documents, as defined
below,  to  Landlord, to the extent applicable, no later than the date specified
for  each  document:
1.     Annual  Financial  Statement  of  Tenant (audited) and Facility Financial
Statement  (audited)  -  within  90  days  after  the  end  of each fiscal year.
2.     Annual  Facility Budget not later than 45 days after the beginning of the
next  fiscal  year.
3.     Quarterly  Variance Report for the Facility, including occupancy, census,
capital  expenditures  and  operating  revenues and expenses by line item with a
detailed  explanation  of  the  cause  of all material variances from the Annual
Facility  Budget  (i.e.,  more than 10% for that line item) and a description of
Tenant's plans for eliminating all material variances - within 45 days after the
     end  of  each  quarter.
4.     Quarterly  Healthcare  Integrity  and Protection Data Bank (HIPDB) Report
(dated  not  earlier than the end of the quarter) - within 45 days after the end
of  each  quarter.
5.     Periodic  Financial Statement of Tenant - within 45 days after the end of
each  quarter.
6.     Monthly  Facility  Financial  Statement - within 30 days after the end of
each  month.
7.     Tenant's  Certificate  and  Annual or Quarterly Facility Financial Report
(Exhibit  O-1)  -  with  each  delivery  of  Tenant's  financial  statements.
8.     Annual  Facility Financial Report (based upon internal financial records)
-  within  60  days  after  the  end  of  each  fiscal  year.
9.     Federal  tax  returns  of Tenant - within 15 days after the filing of the
return.  If  the  filing  date is extended, also provide a copy of the extension
application  within  15  days  after  filing.
10.     If  applicable,  Medicaid cost reports for the Facility - within 15 days
after  filing  of  the  report  with  the  State  agency.
11.     State  and  federal health care survey and inspection reports, inspector
exit  interview  notes and report (if delivered to Tenant), plans of correction,
re-survey  reports,  evidence  of  annual license renewal - within 30 days after
receipt by Tenant, HIPDB adverse action report, notice of licensure deficiencies
     or  commencement  of  licensure  revocation  or decertification proceeding,
notice of admissions ban, issuance of a provisional or temporary license and all
correspondence  regarding  any  of  the foregoing for the Facility - within five
days  after  receipt  by  Tenant.
12.     Real  estate  taxes
(a)     Copy  of  invoice  and  check - within five days after the due date; and
(b)     Copy  of  official  receipt  or other satisfactory evidence of payment -
within  30  days  after  the  due  date.
13.     Certificate of insurance renewal, current Certificate of Compliance from
     insurance agent and evidence of payment of premium - at least 30 days prior
to  the  expiration  of  each  policy.
14.     Facility information:  [i] a security deposit report, including resident
     name, date of move-in, security deposit, and corresponding security deposit
bank  account  balance,  with  a  monthly  update  of any changes; [ii] a report
accounting  for  all  resident  trust  funds, including corresponding trust fund
deposit  bank  accounts; [iii] a schedule and copies of any equipment leases and
financings,  including vendor, equipment descriptions, monthly payment, rate and
maturity,  with  a monthly update of any changes and the required nondisturbance
agreement  if  the  original  cost  of  the equipment exceeds $50,000.00; [iv] a
schedule  of  all utility providers and utility deposits; [v] a list of all rent
concessions, including, but not limited to, free rent, rent reduction, community
fee  waivers, rate locks, rate guaranties and waivers of security deposits; [vi]
a  copy  of  each  private pay resident's occupancy agreement and the Facility's
form  of agreement; [vii] a schedule of all employee vacation and sick days; and
[viii]  employee policies and procedures handbook, including employee benefits -
current  and annually updated reports, schedules and copies to be delivered upon
request.
                                    ~ ~ ~ ~ ~
          The  following  definitions  shall  be  applicable  to this Exhibit O:
          "Annual  Facility  Budget"  means  Tenant's projection of the Facility
Financial  Statement  for  the next fiscal year (or the 12-month rolling forward
period,  if  applicable).
          "Annual Financial Statements" means [i] for Tenant, an audited balance
sheet,  statement  of  income,  and  statement of cash flows for the most recent
fiscal  year  on  an individual facility and consolidated basis and [ii] for the
Facility,  an  unaudited Facility Financial Statement for the most recent fiscal
year.
          "Facility  Financial  Statement"  means  a financial statement for the
Facility  which  shall include the balance sheet, statement of income, statement
of  cash  flows,  statement  of  shareholders'  equity,  occupancy  census  data
(including payor mix), statement of capital expenditures and a comparison of the
actual  financial  data  versus  the  Annual  Facility Budget for the applicable
period.
          "Periodic  Financial  Statements"  means  [i] for Tenant, an unaudited
balance  sheet and statement of income for the most recent quarter; and [ii] for
the  Facility,  an  unaudited  Facility  Financial Statement for the most recent
month.

<PAGE>
                       EXHIBIT O-1:  TENANT'S CERTIFICATE
                         AND FACILITY FINANCIAL REPORTS


Report  Period:     Commencing  _______________  and  ending  _______________

Lease:     Lease  made  by  HCRI  Eddy  Pond  Properties  Trust  ("Landlord") to
Emeritus  Corporation  ("Tenant")


          Tenant  hereby certifies to Landlord to the best of Tenant's knowledge
as  follows:
1.     The  attached  [specify audited or unaudited and annual or quarterly, and
                               -------    ---------     ------    ---------
if consolidated, so state] financial statements of Tenant [i] have been prepared
   ------------
     in  accordance  with  generally accepted accounting principles consistently
applied; [ii] have been prepared in a manner substantially consistent with prior
financial  statements  submitted  to  Landlord;  and  [iii]  fairly  present the
financial  condition  and  performance  of  Tenant  in  all  material  respects.
2.     The attached [Annual or Quarterly] Facility Financial Report and Facility
     Accounts  Receivable  Aging  Report  for the applicable reporting period is
complete,  true  and  accurate  and  has been prepared in a manner substantially
consistent  with  prior  schedules  submitted  to  Landlord.
3.     To  the  best  of  my knowledge, Tenant was in compliance with all of the
provisions of the Lease and all other documents executed by Tenant in connection
     with  the Lease at all times during the applicable reporting period, and no
default,  or any event which with the passage of time or the giving of notice or
both  would  constitute  a  default,  has  occurred  under  the  Lease.
          Executed  this  ___  day  of  _______________,  _____.




Name:

Title:

<PAGE>
                        ANNUAL FACILITY FINANCIAL REPORT

FACILITY  NAME:
FACILITY  ADDRESS:


REPORT  PERIOD:     Twelve  (12)  months  beginning  _______________  and ending
_______________.  All  information  reported  should  be  for  this period only.

                                           % RESIDENT
           OCCUPANCY DATA          CENSUS DATA     DAYS     % REVENUES
                                   -----------     ----     ----------
           Total Beds/Units:     _______     Medicaid:     _______%     _______%
           -----------------     -------     ---------     --------     --------
       Total Available Days:     _______     Medicare:     _______%     _______%
 Total Occupied Days:     _______     Private & Other:     _______%     _______%
         Occupancy Percentage:     _______%     Total:     _______%     _______%


                                 OPERATING DATA

1.     Gross  Revenues     $

2.     Contractual  Allowances     $

3.     Net  Revenues     $

4.     Operating  Expenses(before  interest,  lease/rent,  depreciation,
amortization  and  management  fees)     $
                                          ---

5.     Net  Operating  Income     $

6.     Interest  Expense     $

7.     Lease/Rent  Expense     $

8.     Depreciation  Expense     $

9.     Amortization  Expense     $

10.     Management  Fees     $

11.     Management  Fees  (as  a  percent  of  Gross  Revenues)          %

12.     Overhead  Allocation  (if  applicable)     $

13.     Other  (identify)     $

14.     Income  Taxes     $

15.     Net  Income  (amount  should  agree  with  the  facility's  financial
statements)     $

<PAGE>
                                 FINANCING DATA
               (Note:  This data breaks out Items 6 and 7 above.)


              Related to HCRI     All Other Leases and/or Debt     Total
Lease  Payments      _________      _________      ________
                    -----------     -----------     ----------
Interest  Payments      _________      _________      ________
Principal  Payments  (if  any)      _________      _________      ________
      $      $      $
       =       =       =
                                 COVERAGE RATIO

1.     Net  Operating  Income     $______________
2.     Less  Imputed  Management  Fee
       (  _____%  of  gross  revenues)     (______________)
3.     Less  Imputed  Replacement  Reserve  for  period
       ($_________  per  bed  [or  unit]  per  year)     (______________)
4.     Adjusted  Net  Operating  Income     $______________
5.     Loan/Lease  Payments  to  HCRI     $______________
6.     Actual  Coverage  Ratio  (Line  4  Line  5)     ______________

                                  CURRENT RATIO


1.     Current  Assets     $______________
2.     Current  Liabilities     $______________
3.     Actual  Current  Ratio  (Line  1  Line  2)     ______________


Tenant  hereby  certifies  that  the  foregoing  is  true  and  accurate.

          Date:

Name:          Phone  Number:

     Title:


<PAGE>
                       QUARTERLY FACILITY FINANCIAL REPORT

FACILITY  NAME:
FACILITY  ADDRESS:


REPORT  PERIOD:     Three  (3)  months  beginning  _______________  and  ending
_______________.  All  information  reported  should  be  for  this period only.

                                           % RESIDENT
           OCCUPANCY DATA          CENSUS DATA     DAYS     % REVENUES
                                                            ----------
           Total Beds/Units:     _______     Medicaid:     _______%     _______%
           -----------------     -------     ---------     --------     --------
       Total Available Days:     _______     Medicare:     _______%     _______%
 Total Occupied Days:     _______     Private & Other:     _______%     _______%
         Occupancy Percentage:     _______%     Total:     _______%     _______%


                                 OPERATING DATA

1.     Gross  Revenues     $

2.     Contractual  Allowances     $

3.     Net  Revenues     $

4.     Operating  Expenses  (before  interest,  lease/rent,  depreciation,
 amortization  and  management  fees)     $
                                           ---

5.     Net  Operating  Income     $

6.     Interest  Expense     $

7.     Lease/Rent  Expense     $

8.     Depreciation  Expense     $

9.     Amortization  Expense     $

10.     Management  Fees     $

11.     Management  Fees  (as  a  percent  of  Gross  Revenues)          %

12.     Overhead  Allocation  (if  applicable)     $

13.     Other  (identify)     $

14.     Income  Taxes     $

       15.     Net Income (amount should agree with the facility's financial
                               statements)     $

<PAGE>
                                     ------
                                 FINANCING DATA
               (Note:  This data breaks out Items 6 and 7 above.)


              Related to HCRI     All Other Leases and/or Debt     Total
Lease  Payments      _________      _________      ________
                    -----------     -----------     ----------
Interest  Payments      _________      _________      ________
Principal  Payments  (if  any)      _________      _________      ________
      $      $      $
       =       =       =
                                 COVERAGE RATIO

1.     Net  Operating  Income     $______________
2.     Less  Imputed  Management  Fee
       (  _____%  of  gross  revenues)     (______________)
3.     Less  Imputed  Replacement  Reserve  for  period
       ($_________  per  bed  [or  unit]  per  year)     (______________)
4.     Adjusted  Net  Operating  Income     $______________
5.     Loan/Lease  Payments  to  HCRI     $______________
6.     Actual  Coverage  Ratio  (Line  4  Line  5)     ______________

                                  CURRENT RATIO


1.     Current  Assets     $______________
2.     Current  Liabilities     $______________
3.     Actual  Current  Ratio  (Line  1  Line  2)     ______________


Tenant  hereby  certifies  that  the  foregoing  is  true  and  accurate.

          Date:

Name:          Phone  Number:

     Title:

<PAGE>

               QUARTERLY FACILITY ACCOUNTS RECEIVABLE AGING REPORT
     FACILITY  NAME:
     FACILITY  ADDRESS:



ACCOUNTS  RECEIVABLE  AGING  AS  OF  ____________  (MOST  RECENT  QUARTER ENDED)

PAYOR     0-30  DAYS  %     31-60  DAYS  %     61-90 DAYS  %     OVER 90 DAYS  %
TOTALS  %
Medicaid     $__________  ____%     $__________  ____%     $__________  ____%
$__________  ____%     $__________  ____%
Medicare     $__________  ____%     $__________  ____%     $__________  ____%
$__________  ____%     $__________  ____%
Commercial  Insurance     $__________  ____%     $__________  ____%
$__________  ____%     $__________  ____%     $__________  ____%
Other  -_____________     $__________  ____%     $__________  ____%
$__________  ____%     $__________  ____%     $__________  ____%
TOTALS     $__________  100%     $__________  100%     $__________  100%
$__________  100%     $__________  100%

         % OF TOTALS $     ___________%     ___________%     ___________%
                              ___________%     100%

ACCOUNTS  RECEIVABLE  AGING  AS  OF  ____________  (2ND  RECENT  QUARTER  ENDED)

PAYOR     0-30  DAYS  %     31-60  DAYS  %     61-90 DAYS  %     OVER 90 DAYS  %
TOTALS  %
Medicaid     $__________  ____%     $__________  ____%     $__________  ____%
$__________  ____%     $__________  ____%
Medicare     $__________  ____%     $__________  ____%     $__________  ____%
$__________  ____%     $__________  ____%
Commercial  Insurance     $__________  ____%     $__________  ____%
$__________  ____%     $__________  ____%     $__________  ____%
Other  -_____________     $__________  ____%     $__________  ____%
$__________  ____%     $__________  ____%     $__________  ____%
TOTALS     $__________  100%     $__________  100%     $__________  100%
$__________  100%     $__________  100%

         % OF TOTALS $     ___________%     ___________%     ___________%
                              ___________%     100%