Document:

[LOGO]

DEUTSCHE BANK
Aktiengesellschaft

                             REVISED AS OF JUNE 7, 2004

Date:                        May 6, 2004

To:                          Health Care Reit, Inc

Attention:                   Swaps Documentation Department

Facsimile NO:                1 419 247 2826

OUR REFERENCE:               GLOBAL NO. N304066N

RE:                          INTEREST RATE SWAP TRANSACTION - THIS CONFIRMATION
                             SUPERSEDES AND REPLACES ALL PRIOR COMMUNICATION
                             BETWEEN THE PARTIES HERETO WITH RESPECT TO THE
                             TRANSACTION DESCRIBED BELOW

Ladies and Gentlemen:

The purpose of this letter agreement is to set forth the terms and conditions of
the Transaction entered into between Deutsche Bank AG ("DBAG") and Health Care
REIT, Inc ("Counterparty") on the Trade Date specified below (the
"Transaction"). This letter agreement constitutes a "Confirmation" as referred
to in the Agreement specified below.

The definitions and provisions contained in the 2000 ISDA Definitions (the
"Definitions") as published by the International Swaps and Derivatives
Association, Inc. are incorporated by reference herein. In the event of any
inconsistency between the Definitions and this Confirmation, this Confirmation
will govern.

For the purpose of this Confirmation, all references in the Definitions or the
Agreement to a "Swap Transaction" shall be deemed to be references to this
Transaction.

1. This Confirmation evidences a complete and binding agreement between DBAG
("Party A") and Counterparty ("Party B") as to the terms of the Transaction to
which this Confirmation relates. In addition, Party A and Party B agree to use
all reasonable efforts to negotiate, execute and deliver an agreement in the
form of the ISDA Master Agreement (Multicurrency-Cross Border) (the "ISDA
Form") (as may be amended, modified or supplemented from time to time, the
"Agreement") with such modifications as Party A and Party B will in good faith
agree. Upon execution by the parties of such Agreement, this Confirmation will
supplement, form a part of and be subject to the Agreement. All provisions
contained or incorporated by reference in such Agreement upon its execution
shall govern this Confirmation except as expressly modified below. Until Party A
and Party B execute and deliver the Agreement, this Confirmation, together with
all other documents referring to the ISDA Form (each a "Confirmation")
confirming Transactions (each a "Transaction") entered into between us
(notwithstanding anything to the contrary in a Confirmation) shall supplement,
form a part of, and be subject to an agreement in the form of the ISDA Form as
if Party A and Party B had executed an agreement on the Trade Date of the first
such Transaction between us in such form, with the Schedule thereto (i)
specifying only that (a) the governing law is the laws of the State of New York,

<PAGE>

without reference to choice of law doctrine, provided, that such choice of law
shall be superseded by any choice of law provision specified in the Agreement
upon its execution, and (b) the Termination Currency is U.S. Dollars and (ii)
incorporating the addition to the definition of "Indemnifiable Tax" contained in
(page 48 of) the ISDA "User's Guide to the 1992 ISDA Master Agreements". In the
event of any inconsistency between the terms of this Confirmation, and the terms
of the Agreement, this Confirmation will prevail for the purpose of this
Transaction.

2. The terms of the particular Transaction to which this Confirmation relates
are as follows:

   Notional Amount:                             USD 50,000,000.00

   Trade Date:                                  May 6, 2004

   Effective Date:                              May 7, 2004

   Termination Date:                            November 15, 2013

FIXED AMOUNTS:

   Fixed Rate Payer:                            DBAG

   Fixed Rate Payer Period End Dates:           The 15th day of May and November
                                                of each year, commencing May 15,
                                                2004, through and including the
                                                Termination Date with No
                                                Adjustment

   Fixed Rate Payer Payment Dates:              The 15th day of May and November
                                                of each year, commencing May 15,
                                                2004, through and including the
                                                Termination Date

   Fixed Rate:                                  6.00%

   Fixed Rate Day Count Fraction:               30/360

   FIXED RATE PAYER BUSINESS DAYS:              NEW YORK

   Fixed Rate Payer Business Day                Modified Following
   Convention:

FLOATING AMOUNTS:

   Floating Rate Payer:                         Counterparty

   Floating Rate Payer Period End Dates:        The 15th day of May and November
                                                of each year, commencing May 15,
                                                2004, through and including the
                                                Termination Date

                                        2
<PAGE>

   Floating Rate Payer Payment Dates:              The 15th day of May and
                                                   November of each year,
                                                   commencing May 15, 2004,
                                                   through and including the
                                                   Termination Date

   Floating Rate for initial Calculation Period:   1.78125%

   Floating Rate Option:                           USD-LIBOR-BBA

   Designated Maturity:                            Six months

   Spread:                                         Plus 0.705%

   Floating Rate Day Count Fraction:               Actual/360

   Reset Dates:                                    The last Floating Rate Payer
                                                   Business Day of each
                                                   Calculation Period or
                                                   Compounding Period, if
                                                   Compounding is applicable.

   Compounding:                                    Inapplicable

   FLOATING RATE PAYER BUSINESS DAYS:              NEW YORK

   Floating Rate Payer Business Day
   Convention:                                     Modified Following

3. ACCOUNT DETAILS:

        USD DBAG Payment Instructions:
        Account With:                              Deutsche Bank AG, New York
        SWIFT Code:                                DEUTUS33
        Favor Of:                                  Deutsche Bank AG, New York
        Account Number:                            100440170004

        USD Counterparty Payment Instructions:
        Account With:                              National City Bank
        SWIFT Code:                                NATCUS33
        Favor Of:                                  Health Care REITH, Inc, Ohio
        Account Number:                            10 57359

4. OFFICES:

The Office of DBAG for this Transaction is New York.

The Office of Counterparty for this Transaction is Toledo.

                                        3
<PAGE>

     5. CALCULATION AGENT: The party specified as such in the Agreement, or if
                           not specified therein, DBAG.

     6. REPRESENTATIONS

     Counterparty, if it is a nonresident alien individual, foreign corporation,
     foreign partnership, foreign trust, or foreign estate, represents that it
     is a foreign person for purposes of US Treasury regulations relating to
     information reporting and backup withholding.

     Each party will be deemed to represent to the other party on the date on
     which it enters into this Transaction that (absent a written agreement
     between the parties that expressly imposes affirmative obligations to the
     contrary for this Transaction):

     (i) NON-RELIANCE. It is acting for its own account, and it has made its own
     independent decisions to enter into this Transaction and as to whether this
     Transaction is appropriate or proper for it based upon its own judgement
     and upon advice from such advisers as it has deemed necessary. It is not
     relying on any communication (written or oral) of the other party as
     investment advice or as a recommendation to enter into this Transaction; it
     being understood that information and explanations related to the terms and
     conditions of this Transaction shall not be considered investment advice or
     a recommendation to enter into this Transaction. No communication (written
     or oral) received from the other party shall be deemed to be an assurance
     or guarantee as to the expected results of this Transaction.

     (ii) ASSESSMENT AND UNDERSTANDING. It is capable of assessing the merits of
     and understanding (on its own behalf or through independent professional
     advice), and understands and accepts, the terms, conditions and risks of
     this Transaction. It is also capable of assuming, and assumes, the risks of
     this Transaction.

     (iii) STATUS OF PARTIES. The other party is not acting as a fiduciary for,
     or an adviser to it in respect of this Transaction.

7. OTHER PROVISIONS

     a) The "CROSS DEFAULT" provisions of Section 5(a)(vi) will apply to Party A
     and will apply to Party B.

     In connection therewith, "Specified Indebtedness" will have the meaning
     specified in Section 14, provided, however, that indebtedness or
     obligations in respect of deposits received in the ordinary course of the
     banking business of such person shall not constitute Specified
     Indebtedness.

     "THRESHOLD AMOUNT" means with respect to Party A an amount equal to three
     percent (3%) of Shareholders' Equity and with respect to Party B, the
     amount specified from time to time in Section 8.4, "Other Defaults" of the
     Credit Agreement, which amount is currently $1,500,000

     "CREDIT AGREEMENT" means the Amended and Restated Loan Agreement dated as
     of August 23, 2002, among Party B, Keybank National Association, as
     Administrative Agent, Deutsche Bank Securities Inc., as Syndication Agent,
     UBS Warburg LLC, as Documentation Agent, and the other lenders party
     thereto, as the same has been amended and may be amended, modified,
     supplemented or replaced from time to time.

                                       4
<PAGE>

b)   The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) will apply to
     Party A and to Party B. Provided, however, with respect to Party B, Credit
     Event Upon Merger shall not apply if (a) Party B is the surviving entity,
     (b) the consideration paid in connection with any such merger or
     acquisition does not exceed an amount equal to fifteen percent (15%) of
     Party B'S Consolidated Total Assets (as defined in the Credit Agreement) at
     the date of the consummation of such transaction, prior to giving effect to
     such transaction.

8. SET OFF.

     Section 6 of this Agreement is amended by the addition of the following
     Section 6(f):

     "(f) Upon the designation of any Early Termination Date, the party that is
     not the Defaulting Party or Affected Party ("X") may, without prior notice
     to the Defaulting or Affected Party ("Y"), set off any sum or obligation
     (whether or not arising under this Agreement, whether matured or unmatured,
     whether or not contingent and irrespective of the currency, place of
     payment or booking office of the sum or obligation) owed by Y to X or any
     Affiliate of X (the "X Set Off Amount") against any sum or obligation
     (whether or not arising under this Agreement, whether matured or unmatured,
     whether or not contingent and irrespective of the currency, place of
     payment or booking office of the sum or obligation) owed by X or any
     Affiliate of X to Y (the "Y Set Off Amount"). X will give notice to the
     other party of any set off effected under this Section 6(f).

     For this purpose, either the X Set Off Amount or the Y Set Off Amount (or
     the relevant portion of such set off amounts) may be converted by X into
     the currency in which the other set off amount is denominated at the rate
     of exchange at which X would be able, acting in a reasonable manner and in
     good faith, to purchase the relevant amount of such currency.

     If a sum or obligation is unascertained, X may in good faith estimate that
     obligation and set-off in respect of the estimate, subject to the relevant
     party accounting to the other when the obligation is ascertained.

     Nothing in this Section 6(f) shall be effective to create a charge or other
     security interest. This Section 6(f) shall be without prejudice and in
     addition to any right of set-off, combination of accounts, lien or other
     rights to which any party is at anytime otherwise entitled (whether by
     operation of law, contract or otherwise)."

                                       5
<PAGE>

     9. Please confirm that the foregoing correctly sets forth the terms of our
     agreement by having an authorized officer sign this Confirmation and return
     it via facsimile or e-mail to:

        Attention: Derivative Documentation
        Telephone: 44 20 7547 4755
        Facsimile: 44 20 7545 9761
        E-mail: Derivative.Documentation@db.com

     This message will be the only form of Confirmation dispatched by us. If you
     wish to exchange hard copy forms of this Confirmation, please contact us.

     Yours sincerely,

     Deutsche Bank AG

     By: /s/ Bianca Mueller

     Name: Bianca Mueller
     Authorized Signatory

     By: /s/ Jamie Hunt

     Name: Jamie Hunt
     Authorized Signatory

     Confirmed as of the date first written above:

     Health Care REIT, Inc

     By: /s/ Michael A. Crabtree
         ------------------------
     Name: Michael A. Crabtree
     Title: Treasurer

                                       6<PAGE>
                                                                    EXHIBIT 10.6

                             HEALTH CARE REIT, INC.
                 INTEREST RATE & CURRENCY RISK MANAGEMENT POLICY
                             ADOPTED ON MAY 6, 2004

I. GENERAL OVERVIEW
-------------------
The following interest rate risk management policy establishes the objectives,
policies, procedures, and practices for Health Care REIT, Inc., subsidiaries,
partnerships and other related companies (the "Company") to manage its interest
rate and currency risk position. The Board of Directors and senior management
establish the risk vision for the organization. Further, it is the
responsibility of the Board and senior management to establish an effective set
of policies for the purpose of using derivatives (also referred to as "hedges")
consistent with the Company's underlying strategy, commercial objectives, level
of risk tolerance, and financial capacity and flexibility. Management will
implement practices and procedures consistent with the Company's policies, and
these practices and procedures will be subject to review on an ongoing basis by
the audit committee of the Board of Directors.

II. HEDGING OBJECTIVE
---------------------
The Company manages interest rate risk based on the varying circumstances of
note offerings, revolving credit agreements, and other debt in order to manage
otherwise unpredictable costs and hedges accordingly. In addition, the Company
manages to an appropriate mix of fixed and floating rate debt. Examples include
sometimes swapping or capping rates, hedging portions of the total amount of
debt, or hedging a period of months and not always hedging to maturity, and at
other times locking rates to fix interest costs. The Company may fix rates on
transactions prior to the issuance of debt taking into account factors that
influence the hedging decision, including the degree of certainty, timing and
amount, the material benefit of the hedge, the actual level of rates, the
budgeted debt service, and the state of the financial markets.

The Company will generally pursue interest rate and currency risk mitigation
strategies that result in the least amount of reported earnings volatility under
Generally Accepted Accounting Principles (GAAP) while still meeting strategic
economic objectives and maintaining adequate liquidity and flexibility.

III. HEDGING STRATEGY AND PRODUCTS
----------------------------------
The Company engages in a number of business activities that by nature are
vulnerable to interest rate risk. The Company's hedging strategy is intended to
take advantage of opportunities to reduce, to the extent possible, unpredictable
cash flows, or to mitigate its exposure to changes in fair value. Examples of
business operations whereby the Company is exposed to interest rate risk include
the following:

-    Medium and long-term financing
-    Revolving lines of credit

<PAGE>
HEALTH CARE REIT, INC.
RISK MANAGEMENT POLICY
PAGE 2

When the Company is engaged in business opportunities in foreign countries, the
Company is exposed to foreign exchange risk. To avoid risk of changes in foreign
currencies relative to the Company's functional currency, the US dollar, the
Company will pursue various hedging strategies to mitigate that risk.

The Company may use a variety of commonly used derivative products that are
considered plain vanilla derivatives, and are instruments used by a majority of
real estate companies and other companies to manage interest rate and foreign
currency risk. Included among these are derivatives that help achieve the
appropriate mix of floating and fixed rate debt. The Company expressly prohibits
the use of exotic derivative instruments and using derivative instruments for
speculative purposes. The Company utilizes the following products:

-    Swaps (including options and forwards)
-    Caps (including options and forwards)
-    Collars (including options and forwards)
-    Treasury locks
-    Foreign currency (spot, options, forwards and swaps)

IV. BOARD, EXECUTIVE COMMITTEE AND SENIOR MANAGEMENT INVOLVEMENT IN MANAGING
----------------------------------------------------------------------------
INTEREST RATE RISK AND CURRENCY RISK
------------------------------------

The roles for the members of the Board of Directors and Senior Management in
relation to risk control of derivatives are described below.

The Board of Directors approves:

-    The types of derivative contracts that may be used by the Company to hedge
     interest rate and foreign currency risk

-    The use of any derivatives for other than cash flow, fair value and foreign
     currency hedging purposes (if applicable)

-    Any hedging transaction in excess of $50 million for durations of greater
     than six months

-    General parameters for credit-worthiness of counterparties

The Board of Directors delegates the following responsibilities to senior
management:

<PAGE>
HEALTH CARE REIT, INC.
RISK MANAGEMENT POLICY
PAGE 3

-    Identifying specific financing risks for which it may be desirable to hedge
     and defines precisely the hedging objective, and

-    Working in consultation with the independent risk management consultant to
     structure a derivative transaction to meet the defined objective.

-    Executing the hedging transaction using the services of independent
     interest rate and currency risk management consultants,

-    Preparing timely memoranda necessary to document hedges for both GAAP and
     income tax reporting purposes,

-    Monitoring the fair values of the derivatives in the hedging portfolio,

-    Communicating the appropriate periodic valuation information received from
     the independent interest rate and currency risk management consultants,

-    Reviewing the effectiveness of each hedge during the entire period of time
     the hedge contract is in effect,

-    Engagement of independent interest rate and currency risk management
     consultants,

-    Engaging tax consultants to review and opine on hedging strategy, and

-    Keeping the Board of Directors informed as to all the above activities.

V. HEDGING WITHIN PARAMETERS FOR REIT QUALIFICATION
---------------------------------------------------
The Company is eligible to undertake only certain permissible hedging strategies
in the context of the REIT qualification requirements. In many cases, the tax
accounting rules for hedges may yield different income and expense amounts than
that recognized under GAAP.

For example, a hedge may constitute a bona fide hedge for tax purposes, such
that hedge income is accrued as an offsetting interest expense is incurred.
However, the accounting rules may be different under SFAS No. 133 (as amended
and interpreted) -- the derivative transaction may be subject to mark to market
treatment such that gains and losses become recognized in earnings.

In addition, in certain instances, cash flows realized from a hedge may
constitute non-qualified income for REIT qualification purposes. In these cases,
assurances must be provided that potential income from a hedge cannot exceed
five percent of a REIT's gross income. The Company will properly and timely
identify hedges for tax purposes in order to ensure appropriate tax accounting.

VI. ACCEPTABLE COUNTERPARTY
---------------------------
The Company has established criteria for suitable counterparties in relation to
various specific types of risk (credit risk, reputation risk, market risk).

Acceptable Counterparty - Credit Risk

<PAGE>
HEALTH CARE REIT, INC.
RISK MANAGEMENT POLICY
PAGE 4

The counterparty must have a credit rating of no lower than `A-' from Standard &
Poor's, Moody's, and/or Fitch or other nationally recognized rating agency. The
Company works with a pre-approved list of a limited number of financial
institutions.

Acceptable Counterparty - Reputation Risk

Lenders will meet the credit risk requirements above and are chosen from:
-    Lenders that currently participate in the Company's revolving credit
     facility,
-    Lenders that the Company has done business with in the past and had
     a good working relationship with,
-    Lenders that third-party advisors recommend based on their experience with
     similar type transactions.

VII. CREDIT ISSUES
------------------
The Company will consider using the following methods to control credit
exposure.

-    Collateral agreements: provision for security in the case of default.
-    Netting agreements: provision setting off total amounts of reciprocal
     obligations.
-    Credit guarantees: third party usually with superior credit rating
     guarantees principal balance.
-    Credit triggers: outstanding contracts can be terminated if the
     counterparty's credit rating falls below a certain predetermined level.
-    Mutual termination options: permit either counterparty to terminate
     unconditionally on a specified date before maturity.

VIII. TRANSACTION PROCESS, AUTHORIZATION, PROCEDURES AND CONTROLS
-----------------------------------------------------------------
The Company follows a structured internal control process that involves the
following authorization and procedures. Included in the process are required
approvals for the use of derivative instruments, including specifying the level
of Company staff authorized to engage in derivative transactions and for those
who are permitted to be involved in entering into, negotiating, approving,
executing, and reviewing the accounting and transaction documentation.

The following outlines the procedures and controls for recording and monitoring
the use of all derivatives transactions, including specifically how:
-    the underlying assets and component risks of derivative instruments should
     be analyzed,
-    records will be maintained and how frequently they will be updated,
-    counterparties will be pre-qualified and approved for derivatives
     transactions,
-    the risk management function will proactively supervise derivatives
     exposures, and
-    the risk managers will exercise their control over approved limits.

<PAGE>
HEALTH CARE REIT, INC.
RISK MANAGEMENT POLICY
PAGE 5

The Company has adopted SFAS No. 133 (as amended and interpreted), the
accounting standard governing derivatives that must be adopted by all public
companies and other companies that issue financial reports prepared in
accordance with generally accepted accounting principles. Only certain
qualifying hedges can follow the accounting under SFAS No. 133, which is
typically desirable compared to the mark to market consequences of not
qualifying under SFAS No. 133.

In order to qualify for hedge accounting under Statement of Financial Accounting
Standard No. 133, Accounting for Derivative Instruments and Hedging Activities
(SFAS 133), the hedging relationship, risk management objective, and strategy
for undertaking the hedge will be documented at the inception of each individual
hedge. The Company's Chief Financial Officer or Treasurer will document the
following information in a Hedge Designation Memo:

1.   Identification of hedging instrument
2.   Description of hedged item or transaction
3.   Nature of risk being hedged
4.   Benchmark interest rate being hedged in a hedge of interest rate risk (the
     same benchmark interest rate should be used as the risk being hedged). Note
     that if the benchmark interest rates are not the same, an entity may be
     able to designate the overall changes in cash flows or fair value as the
     hedged risk instead of interest rate risk.
5.   Foreign currency risk being hedged in a hedge of currency risk.
6.   Method to be used for assessing effectiveness of hedging derivative in
     achieving offsetting changes in cash flows or fair value attributable to
     the risk being hedged; this method must be used throughout the hedge
     period.

The following procedures will be followed for each new derivative:

1.   The Treasurer will make a determination whether the derivative must be
     reviewed with tax counsel and auditors prior to entering into the
     derivative.
2.   The Treasurer determines that the instrument meets the Company's hedging
     policies and objectives and makes a recommendation to the Chief Financial
     Officer.
3.   The Chief Financial Officer approves the derivative transaction, if it is
     not a transaction that requires approval by the Board of Directors.
4.   The Chief Financial Officer and Treasurer engage in the derivative
     transaction through its Third Party Advisors (TPA). The TPA completes a
     negotiated transaction or conducts an auction among counterparties chosen
     that meet the Acceptable Counterparty requirements. The Hedge Designation
     Memo is generated as necessary.
5.   The Chief Financial Officer and Treasurer sign the derivative transaction
     confirmation. Copies of such transaction are forwarded to:

<PAGE>
HEALTH CARE REIT, INC.
RISK MANAGEMENT POLICY
PAGE 6

-    Auditor(s)
-    Tax Counsel
-    Outside Counsel
-    Financial Institution/Counterparty
-    Third Party Advisor

The following procedures and controls are followed to monitor the Company's
derivatives:

-    Derivatives are monitored at least quarterly. The Company maintains a
     report listing all derivative agreements, including those with effective
     dates in the future, and their terms. The report is issued to the Treasurer
     from the Company's Third Party Advisors.
-    Hedge designation memos are reviewed quarterly and, if necessary, updates
     are made and included in the SFAS 133 documentation binder.
-    Each quarter, the Chief Financial Officer and Treasurer obtain valuations
     from their Third Party Advisor, and review their reasonableness.
-    Each quarter, the Chief Financial Officer and Treasurer assesses the
     effectiveness of existing hedges.
     -    Effectiveness of each derivative designated as a hedge will be
          assessed for effectiveness using the method specified in the related
          designation memo.
     -    Each hedge must sustain an effectiveness level within an 80% - 125%
          correlation in order to continue to qualify for SFAS 133 accounting
          treatment as a hedge.
-    The Chief Financial Officer, Treasurer and the Company's auditors will
     approve a report stating their conclusions as to effectiveness.
-    The accounting department records the adjustments to mark the derivatives
     to market each quarter and any necessary entries to Other Comprehensive
     Income or to the P&L in accordance with SFAS 133.

The accounting processes and related internal controls that the Company
considers in an effort to meet its risk management objectives involves
consideration of the following key elements:

Control Environment - The control environment considers the integrity, ethical
values, and competence of personnel, as well as management's philosophy and
operating style

Risk Assessment - Risk assessment refers to the identification and analysis of
risks relevant to achieving objectives that form a basis for the overall risk
management.

<PAGE>
HEALTH CARE REIT, INC.
RISK MANAGEMENT POLICY
PAGE 7

Control Activities - The control activities represent the policies and
procedures that are implemented to ensure management's objectives are met.

Information and Communication - The information and communication element refers
to the nature, quality of information, systems requirements and types of reports
that are necessary to meet the Company's objectives.

Monitoring - The monitoring element addresses the ongoing assessment of the
quality and effectiveness of the control system.

Specific items to consider as part of establishing a strong accounting process
and control are the following:

-    An active and effective board of directors that is responsible for the
     approval of the Company's overall risk management strategies
-    Senior management should assume the following responsibilities:
     -    Ensure that derivatives used are consistent with the Company's risk
          management objectives
     -    Authorize and approve the use of derivatives products
     -    Clearly communicate objectives and expectations for derivative
          activities to individuals responsible for executing such trades
-    Ensure that employees or advisors involved in derivative activities have
     the necessary skills and experience
-    Prepare and update periodically an approved counterparty list, which may
     include types of products, maximum/minimum exposures, credit rating, credit
     limits, collateral requirements (both initially and on an ongoing basis),
     etc.
-    Segregation of duties between individuals responsible for making investment
     and credit decisions, custody of assets, disbursing and receiving funds,
     record keeping, confirmation of positions, and the individuals responsible
     for reconciliations.
-    Ensure that the standard disbursements/receipts controls are in place.
-    Preparation and timely review by Senior Management of a report that matches
     "open derivative positions" to hedged items.

<PAGE>
HEALTH CARE REIT, INC.
RISK MANAGEMENT POLICY
PAGE 8

APPENDIX
--------
The following is a description of derivatives products referenced in Section
III, herein, and are typically used by U.S. real estate companies:

     1.   Forward-Rate Agreement, Rate Lock, or Forward Starting Swap: Used
          commonly to lock in interest rates for a future financing or
          refinancing. A forward contract specifies a reference interest rate
          and an agreed upon interest rate on an assumed deposit of a specified
          maturity at a specified future date (settlement date). The term of the
          assumed deposit may begin at a subsequent date (e.g., the contract
          period may be for six months, commencing in three months). At the
          settlement date, the seller of the forward contract pays the buyer if
          interest calculated at the reference rate is higher than that
          calculated at the agreed upon rate; conversely, the buyer pays the
          seller if interest calculated at the agreed upon rate is higher than
          that calculated at the reference rate. Reference rates are typically
          the US Treasury rate or LIBOR swap rate. By using a forward contract,
          the Company can fix the Treasury portion or LIBOR swap rate portion of
          an anticipated transaction.

                                    [DIAGRAM]

                                                  Loan Rate
                             |                  |
                               |              |
                                 |          |
         Effective Rate            |      |
                                     |  |
                         -------------|-----------6.2%
                                    |   |
                                  |       |
                                |           |
                              |               |
                            |                   |  Treasury Lock Rate

     Actual Rates

         The above diagram illustrates the concept of a Treasury Lock hedge--the
         same concept applies to forward starting swaps. As the loan rate rises,
         the offsetting value of the Treasury Lock when it net settles at the
         time of loan origination provides an effective interest rate of 6.2%.

         The accounting for this product usually follows the cash flow hedge
         model specified under SFAS No. 133, where the fair value of the rate
         lock is carried on the balance sheet, with unrealized gains and losses
         on the marked-to-market instrument recorded in other comprehensive
         income. Accumulated gains and losses are recognized in earnings during
         the same period in which the forecasted debt cost is charged to
         expense.

2.   Interest Rate Swap: This is a financial contract in which two parties agree
     to swap streams of payments over a specified period. The payment streams
     are based on an agreed-upon (or notional) principal amount. The term
     notional is used because

<PAGE>
HEALTH CARE REIT, INC.
RISK MANAGEMENT POLICY
PAGE 9

     swap contracts generally involve no exchange of principal at either
     inception or maturity. Rather, the notional amount serves as a basis for
     calculation of the payment streams to be exchanged.

     Interest rate swaps are the most prevalent type of swap contract. As
     diagramed below, one party generally agrees to make periodic payments,
     which are fixed at the outset of the swap contract. The counterparty agrees
     to make variable payments based on a market interest rate (index rate).
     Swap contracts allow the Company to achieve net payments similar to those
     that would be achieved if the end user actually changed the interest rate
     of designated assets or liabilities (underlying cash position) from
     floating to fixed rate, or vice versa. In the diagram below of the swap
     terms, the Company locked in the cost of its floating rate debt to an
     all-in rate of 8.10% (1.45% + 6.65%).

                                   [DIAGRAM]

                                                  6.65%
       |---------|               |-----------|  _________\  |--------------|
       | Lender  |  /___________ |    The    |           /  |    Swap      |
       |---------|  \ LIBOR+1.45 |  Company  |  /________   | Counterparty |
                                 |-----------|  \ LIBOR     |--------------|

     Interest rate swaps normally run to maturity, however circumstances might
     eliminate the end user's need for the swap contract before maturity.
     Accordingly, entities may cancel contracts, sell their position, or enter
     an offsetting swap-contract and realize gains or losses, depending on the
     value of the swap.

     The accounting for interest rate swaps under SFAS No. 133 requires that the
     instrument be carried at fair value on the balance sheet. For swaps used as
     cash flow hedges, unrealized gains and losses are reported in other
     comprehensive income with no effect recognized in earnings as long as the
     characteristics of the swap and the hedged item are closely matched. For
     swaps employed as fair value hedges, the swap and the hedged item are
     adjusted through earnings with no net effect recognized in earnings as long
     as the critical terms of the swap and the hedged item match. Some earnings
     effects may occur when mismatches in the hedge and the designated hedged
     item occur.

3.   Option products--Collars, Caps, Swaptions, and Treasury Options are over
     the counter and thereby negotiated between two parties. Option Contracts
     allow the holder to buy (call) or sell (put) a specific financial
     instrument at a specified price during a specified period (as in an
     American option) or at a specified date (as in a European option). The
     option holder does not have to exercise the option, whereas performance
     under a futures or forward contract is mandatory.

     At inception, the option holder typically pays a premium, which is the fee
     to the writer of the option contract. The premium includes two values, the
     intrinsic value and the time value. The intrinsic value of a call option is
     the excess, if any, of the market

<PAGE>
HEALTH CARE REIT, INC.
RISK MANAGEMENT POLICY
PAGE 10

     price of the item underlying the option contract over the price specified
     in the option contract (the strike or exercise price). The intrinsic value
     of a put is the excess, if any, of the option contract strike price over
     the market price of the item underlying the option contract. The intrinsic
     value of an option cannot be less than zero. The other component of the
     premium's value is the time value. The time value reflects the probability
     that the price of the underlying item will move above the strike price (for
     a call) or below the strike price (for a put) during the exercise period.

     The advantage of holding option contracts is that they can be used to
     mitigate downside price risk without totally negating upside profit
     potential. This is because the loss on a purchased option contract is
     limited to the amount paid for the option contract. Profit on a written
     option contract is limited to the premium received, but the loss potential
     is unlimited because the writer is obligated to settle at the strike price
     if the option is exercised.

     Different option contracts can be combined to transfer risks from one
     entity to another. Examples of such option-based derivatives are caps,
     floors, collars, and swaptions. The diagram below illustrates the concept.

                                   [DIAGRAM]

                                        /
                   |        Cap 8%     /
                   |       -----------/
                   |                 /\
                   |                /  \
                   |               /    \
                   |              /      \
                   |             /        \      Collar
 Effective Rate    |            /         / (between 6% and 8%)
                   | Floor 6%  /         /
                   | ---------/ --------/
                   |         /
                   |        /
                   |       /
                   |      /
                   |     /
                   |    /
                   |   /
                   |  /
                   | /
 Actual Rate       |-----------------------------------

     Interest-rate caps are contracts in which the cap writer, in return for a
     premium, agrees to limit, or cap, the cap holder's risk associated with an
     increase in interest rates. If rates go above a specified interest-rate
     level (the strike price or the cap rate, which is 8 percent in the example
     above), the cap holder is entitled to receive cash payments equal to the
     excess of the market rate over the strike price multiplied by the notional
     principal amount. Issuers of floating-rate liabilities often purchase caps
     to protect against rising interest rates, while retaining the ability to
     benefit from a decline in rates.

     Because a cap is an option-based contract, the cap holder has the right,
     but not the obligation, to exercise the option. If rates move down, the cap
     holder has lost only the premium paid. However, because caps are not
     exchange traded, they could

<PAGE>
HEALTH CARE REIT, INC.
RISK MANAGEMENT POLICY
PAGE 11

     expose the cap holder to credit risk if the cap writer fails to fulfill its
     obligations.

     Interest-rate floors are similar to interest-rate caps. Interest-rate
     floors are contracts in which the floor writer, in return for a premium,
     agrees to limit the risk associated with a decline in interest rates based
     on a notional amount. If rates fall below an agreed upon rate (6 percent in
     the example above), the floor holder will receive cash payments from the
     floor writer equal to the difference between the market rate and an agreed
     upon rate multiplied by the notional principal amount.

     Interest-rate collars combine a cap and a floor (one held and one written).
     Interest-rate collars enable an end user with a floating-rate contract to
     lock into a predetermined interest-rate range, between 6 and 8 percent in
     the diagram.

     Swaptions are option contracts to enter an interest-rate swap contract at
     some future date or to cancel an existing swap contract in the future. As
     such, a swaption contract may act as a floor or a cap for an existing swap
     contract, or be used as an option to enter, close out, or extend a swap
     contract in the future.

     For option contracts used as hedges of cash flow risk, SFAS No. 133 as
     updated by Derivative Implementation Group Issue G20 allows the entire
     change in fair value including time value changes of a perfectly effective
     hedge to be deferred on balance sheet in other comprehensive income. Option
     purchase premiums will be expensed as the hedged item affects earnings.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00069-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00069-of-00352.parquet"}]]