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                                                                EXHIBIT 10.3

                           INTERCOMPANY AGREEMENT

     This INTERCOMPANY AGREEMENT (the "Agreement") is made and entered into 
as of the 30th day of September, 1998, by and between LTC Properties, Inc., a 
Maryland corporation ("LTC"), and LTC Healthcare, Inc., a Nevada corporation 
("Healthcare").

                                 W I T N E S E T H:

     WHEREAS, subject to certain conditions, LTC intends to spin-off certain 
businesses and assets by distributing to LTC common stockholders, Series C 
preferred stockholders and debentureholders 1/10 of a share of common stock, 
$.01 par value per share, of Healthcare for each share of common stock, $.01 
par value per share ("LTC Common Stock") of LTC held and for each share of 
LTC Common Stock into which shares of Series C preferred stock and debentures 
may be converted as of the close of business on the Record Date (the 
"Distribution"); 

     WHEREAS, in connection with the Distribution, LTC and Healthcare have
entered into a Distribution Agreement of even date herewith (the "Distribution
Agreement");

     WHEREAS, LTC may in certain circumstances determine that it is precluded
from pursuing, or is limited in the manner in which it pursues, various business
opportunities due to its status as a real estate investment trust ("REIT") under
Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the
"Code");

     WHEREAS, Healthcare is a newly-formed corporation which was organized by
LTC for the purpose of identifying and making opportunistic real estate
investments that are not generally available to REITs; and

     WHEREAS, in light of the purpose for which Healthcare was formed, LTC and
Healthcare desire to enter into this Agreement in order to provide to each other
a right of first opportunity and notification right with respect to certain
investment opportunities.

     NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereby agree as follows:

     1.   Definitions.  Except as otherwise may be expressly provided herein,
the following terms shall have the meanings set forth below:

          (a)  "Affiliate" with respect to any specified Person, any other 
Person directly or indirectly controlling or controlled by, or under direct 
or indirect common control with, such specified Person.  For purposes of this 
definition, "control," when used with respect to any Person, means the power 
to direct the management and policies of such Person, directly or indirectly, 
whether through the ownership of voting securities, by contract or otherwise; 
and the terms "controlling" and "controlled" shall have meanings correlative 
to the foregoing.  Notwithstanding the foregoing, (i) the Affiliates of LTC 
shall not include Healthcare or any other Person which would be an Affiliate 
of LTC by reason of LTC's ownership of the capital stock of Healthcare prior 
to the Distribution or the fact that any officer or director of Healthcare 
shall also serve as an officer or director of LTC, and (ii) the Affiliates of 
Healthcare shall not include LTC or any other Person which would be an 
Affiliate of Healthcare by reason of LTC's ownership of

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the capital stock of Healthcare prior to the Distribution or the fact that any
officer or director of Healthcare shall also serve as an officer or director of
LTC. 

          (b)  "Agreement" shall have the meaning set forth in the introductory
paragraph hereof.

          (c)  "Change in Control" shall mean a change in ownership or control
of a party effected through either of the following transactions:

               (i)    any person or related group of persons (other than such
party or a Affiliate of such party) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as amended) of securities possessing more than fifty percent (50%) of the
total combined voting power of such party's outstanding securities; or

               (ii)   there is a change in the composition of such party's board
of directors over a period of thirty-six (36) consecutive months (or less) such
that a majority of the board members (rounded up to the nearest whole number)
ceases, by reason of one or more proxy contests for the election of board
members, to be comprised of individuals who either (A) have been board members
continuously since the beginning of such period or (B) have been elected or
nominated for election as board members during such period by at least a
majority of the board members described in clause (A) who were still in office
at the time such election or nomination was approved by the board; or

               (iii)  there is a change in the composition of such party's
senior executive management such that both Andre C. Dimitriadis and James J.
Pieczynski cease to be employed by such party.

          (d)  "Code" shall have the meaning set forth in the recitals hereof.

          (e)  "Distribution" shall have the meaning set forth in the first
recital of this Agreement.

          (f)  "Distribution Agreement" --  the agreement described in the
second recital of this Agreement.

          (g)  "Healthcare" shall have the meaning set forth in the introductory
paragraph hereof.

          (h)  "LTC" shall have the meaning set forth in the introductory
paragraph hereof.

          (i)  "Notice" shall have the meaning set forth in Section 2(a)(i)
hereof.

          (j)  "Person" shall mean any individual, corporation, partnership,
association, trust, estate or other entity or organization, including any
governmental entity or authority.

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          (k)  "REIT" shall have the meaning set forth in the recitals hereof.

          (l)  "REIT Opportunity" shall mean a direct or indirect opportunity 
to invest in real estate through mortgage loans, facility lease transactions 
and other investments.  LTC shall have the right from time to time to provide 
written notice to Healthcare specifying certain criteria for a REIT 
Opportunity in addition to the criteria specified above in this definition of 
REIT Opportunity.  Any such written notice from LTC may be modified or 
canceled by written notice given by LTC at any time. This definition of REIT 
Opportunity shall be modified as appropriate from time to time in accordance 
with any such written notices sent by LTC.

          (m)  "Ten-Day Period" shall have the meaning set forth in Section
2(a)(i) hereof.

          (n)  "Withdrawal Date" shall have the meaning set forth in Section
2(a)(ii) hereof.

     2.   RIGHT OF FIRST OPPORTUNITY; NOTIFICATION RIGHT.

          (a)  RIGHT OF FIRST OPPORTUNITY.

               (i)    During the term of this Agreement, if Healthcare develops
a REIT Opportunity, or if any REIT Opportunity otherwise becomes available to
Healthcare, Healthcare shall first offer such REIT Opportunity to LTC.  The
offer shall be made by written notice (the "Notice") from Healthcare to LTC,
which Notice shall contain a detailed description of the material terms and
conditions of the REIT Opportunity.  LTC shall have ten days (the "Ten-Day
Period") from the date of receipt of the Notice to notify Healthcare in writing
that it has accepted or rejected the REIT Opportunity.  If LTC does not respond
by the end of the Ten-Day Period, LTC shall be deemed to have rejected the REIT
Opportunity.  If LTC accepts a REIT Opportunity, but subsequently decides not to
pursue such opportunity or for any other reason fails to consummate such
opportunity, LTC shall immediately provide written notice that it is no longer
pursuing such REIT Opportunity to Healthcare.

               (ii)   If LTC rejects a REIT Opportunity, or accepts such REIT
Opportunity but thereafter provides, or is required by the provisions hereof to
provide, written notice to Healthcare that it is no longer pursuing such REIT
Opportunity, Healthcare shall, for a period of one year after the Withdrawal
Date (as hereinafter defined), be entitled to acquire the REIT Opportunity (A)
at a price, and on terms and conditions, that are not more favorable to
Healthcare in any material respect than the price and terms and conditions set
forth in the Notice relating to such REIT Opportunity or (B) if LTC, at any time
after the Notice, negotiated a different price, terms or conditions with the
party providing such REIT Opportunity, then at a price, and on terms and
conditions, that are not more favorable to Healthcare in any material respect
than the price and terms and conditions negotiated by LTC with such party.  If
Healthcare does not enter into a binding agreement to acquire the REIT
Opportunity within such one-year period, or if the price and terms and
conditions are more favorable to Healthcare in any material respect than the
price and terms and conditions set forth in the Notice (or, if applicable, than
the 


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price and terms and conditions negotiated by LTC with the seller subsequent to
the Notice), Healthcare shall again be required to comply with the procedures
set forth above in Section 2(a)(i) if it desires to acquire such REIT
Opportunity.  The "Withdrawal Date" means any one of the following dates, as
applicable: (A) the date that LTC notifies Healthcare that it has rejected the
REIT Opportunity, (B) if LTC does not respond to Healthcare regarding the REIT
Opportunity, the expiration date of the Ten-Day Period, or (C) if LTC accepts
the REIT Opportunity but subsequently ceases to pursue the opportunity, the
earlier of (1) thirty (30) days after the date on which LTC ceases to pursue the
REIT Opportunity or (2) the date of receipt by Healthcare of written notice from
LTC that it is no longer pursuing the REIT Opportunity.

          (b)  NOTIFICATION RIGHT.  In the event that either party hereto
develops or becomes aware of any investment opportunity during the term of this
Agreement (other than a REIT Opportunity), and such party is not interested in
pursuing such opportunity, or the opportunity is otherwise unavailable to such
party, such party shall immediately notify the other party of such opportunity
and provide to the other party a copy of all written information, and a
description of all material terms not set forth in writing, available to such
party concerning such opportunity.

     3.   GENERAL TERMS AND CONDITIONS FOR FIRST OPPORTUNITY/NOTIFICATION
          RIGHTS.

          (a)  Unless waived or unless agreed to as part of an investment, each
party hereto shall bear its own expenses with respect to any opportunity to
which this Agreement is applicable, and each party agrees that it shall not be
entitled to any compensation from the other party with respect to any such
opportunity.

          (b)  A party shall not be required to comply with the right of first
opportunity and notification requirements set forth in this Agreement during any
period in which the other party or any Affiliate of such other party is in
default of this Agreement or any other agreement entered into by the parties
hereto or any of their Affiliates, if such default is material and remains
uncured for fifteen (15) days after receipt of notice thereof.

          (c)  Any opportunity which is offered to and accepted by LTC under
this Agreement may be entered into by or on behalf of LTC or by any designee
which is a Affiliate of LTC.  Any opportunity which is offered to and accepted
by Healthcare under this Agreement may be entered into by or on behalf of
Healthcare or by any designee which is a Affiliate of Healthcare.

          (d)  All first opportunity and notification rights set forth in this
Agreement shall be subordinated to any consent and confidentiality requirements
of any party providing a REIT Opportunity; no party shall be required to comply
with the first opportunity and notification rights set forth in this Agreement
to the extent such compliance would violate any consent or confidentiality
requirements of the party providing such a REIT Opportunity.

          (e)  While it is the intention of the parties to align their
businesses in accordance with the terms of this Agreement, each party shall act
independently in its own best 


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interests, and neither party shall be considered a partner or agent of the other
party or owe any fiduciary or other common law duties to the other party.

     4.   NO PREPAYMENTS.  Healthcare hereby agrees that it shall not prepay
or cause to be prepaid any of its mortgage loans provided by LTC which are
securitized in REMIC transactions. 

     5.   SPECIFIC PERFORMANCE.  Each party hereto hereby acknowledges that the
obligations undertaken by it pursuant to this Agreement are unique and that the
other party would likely have no adequate remedy at law if such party shall fail
to perform its obligations hereunder, and such party therefore confirms that the
other party's right to specific performance of the terms of this Agreement is
essential to protect the rights and interests of the other party.  Accordingly,
in addition to any other remedies that a party hereto may have at law or in
equity, such party shall have the right to have all obligations, covenants,
agreements and other provisions of this Agreement specifically performed by the
other party hereto and the right to obtain a temporary restraining order or a
temporary or permanent injunction to secure specific performance and to prevent
a breach or threatened breach of this Agreement by the other party.

     6.   TERM.  The term of this Agreement shall commence as of the date of
this Agreement and shall terminate upon the earlier of (a) the tenth (10th)
anniversary of the date of this Agreement, or (b) a Change in Control of LTC. 
Notwithstanding the foregoing, a party hereto may terminate this Agreement if
the other party or any Affiliate of such other party is in default of this
Agreement or any other agreement entered into by the parties hereto or any of
their Affiliates, if such default is material and remains uncured for fifteen
(15) days after receipt of notice thereof.

     7.   MISCELLANEOUS.

          (a)  NOTICES.  Notices shall be sent to the parties at the following 
               addresses:

                      LTC Properties, Inc.
                      300 Esplanade Drive, Suite 1860
                      Oxnard, California  93030
                      Attn:  James J. Pieczynski
                      Facsimile:  (805) 981-8663

                      LTC Healthcare, Inc.
                      300 Esplanade Drive, Suite 1860
                      Oxnard, California  93030
                      Attn:  James J. Pieczynski
                      Facsimile:  (805) 981-8663

          Notices may be hand-delivered or sent by certified mail, return
receipt requested, Federal Express or comparable overnight delivery service, or
facsimile.  Notice shall be deemed received at the time delivered by hand, on
the fourth business day following deposit in the U.S. mail, and on the first
business day following deposit with Federal Express or other delivery 


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service, or transmission by facsimile.  Any party to this Agreement may change
its address for notice by giving written notice to the other party at the
address and in accordance with the procedures provided above.

          (b)  REASONABLE AND NECESSARY RESTRICTIONS.  Each of the parties
hereto hereby acknowledges and agrees that the restrictions, prohibitions and
other provisions of this Agreement are reasonable, fair and equitable in scope,
term and duration, and are necessary to protect the legitimate business
interests of the parties hereto.  Each party covenants that it will not sue to
challenge the enforceability of this Agreement or raise any equitable defense to
its enforcement.

          (c)  SUCCESSORS AND ASSIGNS.  This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns.  This Agreement shall not be assigned without the
express written consent of each of the parties hereto.

          (d)  AMENDMENTS; WAIVERS.  No termination, cancellation, modification,
amendment, deletion, addition or other change in this Agreement, or any
provision hereof, or waiver of any right or remedy herein provided, shall be
effective for any purpose unless such change or waiver is specifically set forth
in a writing signed by the party or parties to be bound thereby.  The waiver of
any right or remedy with respect to any occurrence on one occasion shall not be
deemed a waiver of such right or remedy with respect to such occurrence on any
other occasion.

          (e)  GOVERNING LAW.  This Agreement and the rights and obligations of
the parties hereunder shall be governed by the laws of the State of California,
without regard to the principles of choice of law thereof, except with respect
to matters of law concerning the internal corporate affairs of any corporate
entity which is a party to or subject of this Agreement, and as to those matters
the law of the jurisdiction under which the respective entity derives its powers
shall govern.

          (f)  SEVERABILITY.  In the event that one or more of the terms or
provisions of this Agreement or the application thereof to any person(s) or in
any circumstance(s) shall, for any reason and to any extent be found by a court
of competent jurisdiction to be invalid, illegal or unenforceable, such court
shall have the power, and hereby is directed, to substitute for or limit such
invalid term(s), provision(s) or application(s) and to enforce such substituted
or limited terms or provisions, or the application thereof.  Subject to the
foregoing, the invalidity, illegality or enforceability of any one or more of
the terms or provisions of this Agreement, as the same may be amended from time
to time, shall not affect the validity, legality or enforceability of any other
term or provision hereof.

          (g)  ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.  This Agreement
(i) constitutes the entire agreement and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral, between
the parties hereto with respect to the subject matter hereof, so that no such
external or separate agreement relating to the subject matter of this Agreement
shall have any effect or be binding, unless the same is referred to 


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specifically in this Agreement or is executed by the parties after the date
hereof; and (ii) is solely for the benefit of the parties hereto and shall not
be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without this Agreement.

          (h)  TITLES AND HEADINGS.  Titles and headings to sections herein are
inserted for the convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.

          (i)  COUNTERPARTS.  This Agreement may be executed in two or more
counterparts, each of which together shall be deemed to be an original and all
of which together shall be deemed to constitute one and the same agreement.

          (j)  DISPUTE RESOLUTION.  Any dispute arising under this Agreement
shall be resolved by binding arbitration in the manner contemplated by Section
9.13 of the Distribution Agreement, including the attorneys fees provisions
referred to therein.

          (k)  EXPENSES.  Except as otherwise set forth in this Agreement, all
costs and expenses in connection with the preparation, execution, delivery and
implementation of this Agreement and with the consummation of the transactions
contemplated by this Agreement shall be charged to the party for whose benefit
the expenses are incurred, with any expenses which cannot be allocated on such
basis to be split equally between the parties.

          (l)  RELATIONSHIP OF PARTIES.  Nothing in this Agreement shall be
deemed or construed by the parties or any third party as creating the
relationship of principal and agent, partnership or joint venture between the
parties, it being understood and agreed that no provision contained herein, and
no act of the parties, shall be deemed to create any relationship between the
parties other than the relationship set forth herein.

          (m)  FURTHER ACTION.  Healthcare and LTC each shall cooperate in good
faith and take such steps and execute such papers as may be reasonably requested
by the other party to implement the terms and provisions of this Agreement.

          (n)  LEGAL ENFORCEABILITY.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof.  Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.  Without prejudice to
any rights or remedies otherwise available to any party hereto, each party
hereto acknowledges that damages would be an inadequate remedy for any breach of
the provisions of this Agreement and agrees that the obligations of the parties
hereunder shall be specifically enforceable.


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          (o)  PREDECESSORS AND SUCCESSORS.  To the extent necessary to give
effect to the purposes of this Agreement, any reference to any corporation shall
also include any predecessor or successor thereto, by operation of law or
otherwise.

                               (SIGNATURE PAGE FOLLOWS)


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          IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by one of its duly authorized officers, as of the date
first written above.

                                    LTC PROPERTIES, INC.

                                    BY: /s/ ANDRE C. DIMITRIADIS
                                    -------------------------------------------
                                    Name:  Andre C. Dimitriadis
                                    Title: Chairman and Chief Executive Officer


                                    LTC HEALTHCARE, INC.


                                    By: /s/ JAMES J. PIECZYNSKI
                                    -------------------------------------------
                                    Name:  James J. Pieczynski
                                    Title: President and Chief Financial Officer



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