Document:

EX-10.3

MORTGAGE,

SECURITY AGREEMENT AND

ASSIGNMENT OF RENTS AND LEASES

THIS INDENTURE (hereinafter referred to as the “Mortgage”) made as of the 31st day
of March, 2010, by and between G & E HEALTHCARE REIT II SARTELL MOB, LLC, a Delaware limited
liability company (the “Mortgagor”), whose mailing address is 1551 North Tustin Avenue, Suite 200,
Santa Ana, California 92705, and STINGRAY PROPERTIES, LLC, a Minnesota limited liability company
(the “Mortgagee”) whose mailing address is 6975 Saukview Drive, St. Cloud, Minnesota 56303.

This Mortgage secures Mortgagor’s obligations: (i) under the Performance of Loan Obligations
and Indemnity Agreement of even date herewith by and between Mortgagor and Mortgagee (the
“Performance Agreement”), together with all extensions, amendments and renewals thereof; and (ii)
under this Mortgage, together with all extensions, amendments and renewals thereof; (all such sums
being collectively referred to herein as the “Secured Indebtedness”). For the purposes of
Minnesota Statutes Section 287.03 (and for mortgage registration taxes in connection herewith), the
“initial amount of the debt” is deemed to be $3,340,516 and 00/100ths ($3,340,516.00) Dollars.
Notwithstanding the foregoing, Mortgagee and Mortgagor acknowledge that no debt shall be owed by
Mortgagor to Mortgagee except as provided in the Performance Agreement.

In consideration of the sum of $1.00 paid by the Mortgagee to the Mortgagor and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Mortgagor
does hereby MORTGAGE, GRANT, BARGAIN, SELL AND CONVEY unto the Mortgagee, its successors and
assigns, forever, and GRANTS A SECURITY INTEREST to the Mortgagee, its successors and assigns, in
the following properties (all of the following being hereafter collectively referred to as the
“Mortgaged Premises”), subject to the Permitted Exceptions (as hereinafter defined):

A. Real Property

All the tracts or parcels of real property lying and being in the County of Stearns, State of
Minnesota (the “Land”), all as more fully described in Exhibit A attached hereto and made a part
hereof, together with all the estates and rights in and to the Land and in and to lands lying in
any and all streets, lanes, alleys, passages and roads adjoining the Land, and together with all
buildings, structures, improvements, fixtures, annexations, access rights, easements, rights of way
or use, servitudes, licenses, tenements, hereditaments, appurtenances, minerals, mineral rights,
water and water rights, now or hereafter belonging or pertaining to the Land; and

B. Personal Property

All buildings, structures, equipment, fixtures, improvements, building supplies and materials
and personal property now or hereafter attached to, located in, placed in or necessary to the use
of the improvements on the Mortgaged Premises; and

C. Leases, Rents, Issues and Profits

All leases, rents, issues and profits now due or which may hereafter become with respect to
the Mortgaged Premises or any part thereof; and

D. Judgments and Awards

Any and all awards or compensation made by any governmental or other lawful authorities for
the taking or damaging by eminent domain of the whole or any part of the Mortgaged Premises

or any rights appurtenant thereto, including any awards for a temporary taking, change of grade of
streets or taking of access; and

E. After-Acquired Property

All right, title, and interest of the Mortgagor in and to all extensions, improvements,
betterments, renewals, substitutes, and replacements of, and all additions and appurtenants to the
items or types of property described in Sections A through D above, which are hereafter acquired by
or released to the Mortgagor, or are hereafter constructed, assembled or placed by the Mortgagor on
the Mortgaged Premises, and all conversions of the security constituted thereby, immediately upon
such acquisition, release, construction, assembling, placement, or conversion, as the case may be,
and in each such case, without any further mortgage, conveyance, assignment, or other act by the
Mortgagor, shall become subject to the lien of this Mortgage as fully and completely, and with the
same effect, as though now owned by the Mortgagor and specifically described in the granting clause
hereof, but at any and all times the Mortgagor will execute and deliver to the Mortgagee any and
all such further assurances, mortgages, conveyances, or assignments thereof as the Mortgagee may
reasonably require for the purpose of expressly and specifically subjecting the same to the lien of
this Mortgage.

TO HAVE AND TO HOLD the Mortgaged Premises unto the Mortgagee forever.

ARTICLE I

Mortgagor’s

Representations, Warranties

Covenants and Agreements

The Mortgagor makes and includes in this Mortgage the Statutory Covenants and other provisions
set forth in Minnesota Statutes Section 507.15 or in any future Minnesota Statute providing for a
statutory form of real estate mortgage, and the Mortgagor makes the following additional
representations, warranties, covenants and agreements with the Mortgagee:

1.1. Good Title; Covenant to Defend. The Mortgagor represents, warrants and
covenants to and with the Mortgagee that: (a) the Mortgagor has the right and lawful authority to
mortgage, grant, sell, transfer and convey the Mortgaged Premises to the Mortgagee, as provided
herein, subject to the exceptions set forth on Exhibit B attached hereto and made part hereof and
other exceptions which do not materially impact the lien in favor of the Mortgagee as created
herein (collectively, the “Permitted Exceptions”), which Permitted Encumbrances include [that
certain Third Party Mortgage, Security Agreement, Fixture Financing Statement and Assignment of
Leases and Rents dated September 16, 2005 between Sylvan Holdings, LLC as mortgagor and Wells Fargo
Bank, National Association, as mortgagee (the “Lender”), recorded in the Office of County Recorder,
Stearns County, Minnesota, as document number 1169890, as the same has been assigned and modified
(the “Senior Mortgage”)]; (b) this Mortgage is and shall remain a valid and enforceable priority
lien on the Mortgaged Premises, subject only to the exceptions referred to above; (c) the Mortgagor
will preserve its fee title to the Mortgaged Premises as set forth herein; and (d) the execution of
this Mortgage has been duly authorized.

1.2. Performance of the Performance Agreement and Mortgage. The Mortgagor shall duly
and punctually perform and observe all of the covenants, agreements and provisions contained herein
and in the Performance Agreement.

1.3. Care of Mortgaged Premises; No Waste. The Mortgagor shall, at all times, keep
and maintain the Mortgaged Premises in good condition, repair and operating condition, ordinary
wear and tear excepted, and shall not commit, or suffer to be committed, any waste or misuse of the
Mortgaged Premises, and shall promptly repair, restore or replace, any buildings, improvements or
structures now or hereafter placed or located on the Mortgaged Premises which may become damaged or
destroyed.

1.4. Payment of Utilities and Operating Costs. Subject to Section 1.8 hereof, the
Mortgagor shall pay, or cause to be paid, all appropriate charges made for electricity, gas, heat,
water, sewer, and all other utilities and operating costs and expenses, received, furnished or used
in connection with the Mortgaged Premises, and will, upon written request by the Mortgagee, furnish
proper receipt showing payment therefore.

1.5. Liens. Subject to Section 1.8 hereof, the Mortgagor shall pay, or cause to be
paid, from time to time when the same shall become due, all lawful claims and demands of mechanics,
materialmen, laborers, and others which, if unpaid, would result in, or permit the creation of a
lien on the Mortgaged Premises, or any part thereof, or on the revenues, rents, issues, income and
profits arising therefrom, to the extent such lien would have a material impact on the lien created
by this Mortgage. Should any fixture be installed to the Mortgages Premises from or after the date
hereof, the lien of this Mortgage shall immediately attach to said fixture and, subject to the
Permitted Encumbrances, shall be prior and superior to all other liens or claims. The Mortgagor
will promptly perform and observe, or cause to be performed or observed, all of the terms,
covenants, and conditions of all Permitted Encumbrances, as set forth in Exhibit B attached hereto,
the noncompliance with which would materially affect the security of this Mortgage, and the
Mortgagor shall do or cause to be done all things reasonably necessary to preserve intact and
unimpaired all material easements, appurtenances, and other interests and rights in favor of or
constituting any portion of the Mortgaged Premises.

1.6. Real Property Taxes and Assessments. The Mortgagor agrees to pay, or cause to
be paid, all real property taxes, assessments, and other similar charges made against the Mortgaged
Premises.

1.7. Compliance with Laws. Subject to Section 1.9 hereof, the Mortgagor shall comply
with all applicable present and future laws, ordinances, regulations, covenants, conditions and
restrictions affecting the Mortgaged Premises or the operation thereof, and shall pay, or cause to
be paid, all applicable fees or charges of any kind in connection therewith. The Mortgagor shall
not, by act or omission, impair the integrity of the Mortgaged Premises as separate subdivided
zoning lots separate and apart from all other lots.

1.8. Permitted Contests. Notwithstanding any provision of this Mortgage to the
contrary, the Mortgagor shall not be required to: (a) pay any charge referred to Section 1.4
hereof; (b) discharge or remove any lien, encumbrance or charge referred to in Section 1.5 hereof;
(c) pay the tax, assessment or other charged referred to in Sections 1.6 and 1.7 hereof, or (d)
comply with any statute, law, rule, regulation or ordinance referred to in Section 1.7 hereof, so
long as the Mortgagor shall in good faith contest the same or the validity thereof by appropriate
legal or other proceedings which shall operate to prevent the collection of the imposition so
contested, or the sale, forfeiture or loss of the Mortgaged Premises, or any part thereof to
satisfy the same. Any such contest shall be prosecuted with due diligence and the Mortgagor shall,
after final determination thereof, promptly pay, or cause to be paid, the amount of any such
imposition so determined, together with all interest and penalties which may be payable in
connection therewith.

1.9. Duty to Defend. The Mortgagor shall promptly notify the Mortgagee of and appear
in and defend any suit, action or proceeding that materially affects the value of the Mortgaged
Premises. The Mortgagee may, at its option, elect to appear in or defend any such action or
proceeding at its own cost.

1.10. Insurance Coverage. The Mortgagor shall obtain and keep in full force and
effect during the term of this Mortgage insurance coverage in accordance with the Senior Mortgage.

1.11. Notice of Damage. The Mortgagor shall give the Mortgagee prompt notice of any
material damage to or destruction of the Mortgaged Premises. So long as the Mortgagor is not in
default under the terms of this Mortgage, the proceeds or any part thereof shall be applied to the
restoration or repair of the Mortgaged Premises or as otherwise required by the Senior Mortgage.

1.12. Condemnation. The Mortgagor shall give the Mortgagee prompt notice of any
action, actual or threatened, in condemnation or eminent domain.

1.13. Restoration of Mortgaged Premises After Loss. Should any insurance or
condemnation proceeds be applied to the restoration or repair of the Mortgaged Premises the
restoration or repair shall be done in accordance with the Senior Mortgage.

1.14. Hazardous Substances. The Mortgagor represents, warrants and covenants to the
Mortgagee that it shall not, nor shall the Mortgagor permit others to, use the Mortgaged Premises
at any time to generate, transport, store, process, treat, or dispose of a toxic or hazardous
substance, waste or constituent, to the extent prohibited by the Senior Mortgage. The Mortgagor
shall not, nor shall the Mortgagor permit others to take, fail to take, or permit any action which
may result in a release of any toxic or hazardous substance, waste or constituent in, on, about or
from the Mortgaged Premises to the extent prohibited by the Senior Mortgage. The Mortgagor
warrants that the Mortgagor is not subject to any claim for which any local, state or federal law
governing liability for any such substance, waste or constituent may apply. Within ten (10)
business days after learning of the occurrence of (a) the commencement of any litigation,
arbitration or other proceeding that materially, adversely affects the Mortgaged Premises, or (b)
written notice from any government or governmental agency that the Mortgaged Premises or any
operations thereon are not in compliance with any local, state or federal law rule or ordinance, or
(d) written notice that the Mortgagor or all or part of the Mortgaged Premises is subject to any
investigation relating to any toxic or hazardous substance, waste or constituent, the Mortgagor
shall give the Mortgagee written notice thereof.

1.15. Financial and Operating Statements. To the extent required by the Senior
Mortgage, the Mortgagor shall keep and maintain, at all times, full, true, and accurate books of
accounts, in sufficient detail to show the names of the tenants, if any, occupying the Mortgaged
Premises, the rent paid by each such tenant and security deposits, if any, copies of all leases, if
any, and such other books and records showing in detail the earnings and expenses of the Mortgaged
Premises.

1.16. Mortgagee’s Right of Entry. The Mortgagor shall permit the Mortgagee or its
authorized representatives to enter the Mortgaged Premises at reasonable times during normal
business hours, and without disturbing any tenants, upon at least two (2) prior business days’
written notice, for the purpose of inspecting the same; provided, however, the Mortgagee shall have
no duty to make such inspections and shall not incur any liability or obligation for making or not
making any such inspections.

1.17. Due on Sale. Subject to the Senior Mortgage, the Mortgagor may, at any time in
its sole discretion, voluntarily sell, convey, transfer, further mortgage, encumber, or dispose of
the Mortgaged Premises, or any part thereof, or any interest therein, legal or equitable, or agree
to do so, without obtaining the consent of the Mortgagee.

1.18. Mortgagee’s Right to Cure. Subject to the Mortgagor’s rights under Section 1.8
hereof, if the Mortgagor shall fail to comply with any of the covenants or obligations of this
Mortgage, then the Mortgagee may, but shall not be obligated to, upon notice to the Mortgagor, but
without waiving or releasing the Mortgagor from any obligation contained in this Mortgage, perform
such covenants and agreements, investigate and defend against such action or proceeding, and take
such other action as the Mortgagee deems reasonably necessary to protect its interest in the
Mortgaged Premises or this Mortgage. The Mortgagor agrees to repay upon demand all reasonable sums
incurred by the Mortgagee in remedying any such failure, together with interest at the rate of six
(6%) percent. All such sums, together with interest as aforesaid, shall become so much additional
Secured Indebtedness, but no such advance shall be deemed to relieve the Mortgagor from any failure
hereunder.

1.19. Uniform Commercial Code Security Interest. This Mortgage shall constitute a
security agreement as defined in the Uniform Commercial Code and SHALL BE EFFECTIVE AS A FINANCING
STATEMENT FILED AS A FIXTURE FILING which is to be filed in the real estate records of the County
where the Mortgaged Premises are situated. The name of the record owner of said real estate is the
Mortgagor set forth on page one of this Mortgage. Information concerning the security interest
created by this Mortgage may be obtained from the Mortgagee, as secured party, at its address as
set forth on page one of this Mortgage. The name and address of the Mortgagor, as debtor, and the
name and address of the Mortgagee, as secured party, are as set forth on page one of this Mortgage.
This Mortgage covers goods which are, or are to become, fixtures. This Mortgage is sufficient as
a financing statement, and as a financing statement it covers goods which are, or are to become,
fixtures on the Land. In addition, the Mortgagor shall execute and deliver to the Mortgagee, upon
the Mortgagee’s request, any financing statements or amendments thereto or continuation statements
thereto that the Mortgagee may reasonably require to perfect a security interest in said items or
types of property, and the Mortgagor further hereby authorizes and consents to the filing of one or
more financing statements to perfect the security interests created by this Mortgage. The
Mortgagee shall pay all costs of filing such instruments.

1.20. No Consent. Nothing contained in this Mortgage shall constitute any consent or
request by the Mortgagee, express or implied, for the performance of any labor or services or for
the furnishing of any materials or other property in respect of the Mortgaged Premises or any part
thereof, nor as giving the Mortgagor or any party in interest with the Mortgagor any right, power
or authority to contract for or permit the performance of any labor or services or the furnishing
of any materials or other property in such fashion as would create any personal liability against
the Mortgagee in respect thereof (except pursuant to any lease of the Mortgaged Premises), or would
permit the making of any claim that any lien based on the performance of such labor or services or
the furnishing of any such materials or other property is prior to the lien of this Mortgage.

1.21. Further Assurances. The Mortgagor shall execute and deliver to the Mortgagee
from time to time, such further instruments, security agreements, financing statements under the
Uniform Commercial Code and assurances and do such further acts reasonably required to carry out
more effectively the purposes of this Mortgage and without limiting the foregoing, to make subject
to the lien hereof any property agreed to be subjected hereto or covered by the granting clause
hereof, or so intended to be. The Mortgagee shall pay any recording fees, filing fees, mortgage
registry taxes, stamp taxes and other charges arising out of or incident to the filing or recording
of this Mortgage and all documents collateral there, such further assurances and instruments and
the issuance and delivery of the Performance Agreement.

1.22. Miscellaneous Rights of Mortgagee. Except as may be prohibited by the
Performance Agreement, without affecting the liability of any party liable for payment of the
Secured Indebtedness or the performance of any obligation contained herein, and without affecting
the rights of the Mortgagee with respect to any security not expressly released in writing, the
Mortgagee may, at any time, and without notice to or the consent of the Mortgagor or any party with
an interest in the Mortgaged Premises or, except as expressly provided below, (a) release any
person or entity liable for payment of all or any part of the Secured Indebtedness or for the
performance of any obligation herein, (b) make any agreement extending the time or otherwise
altering the terms of payment of all or any part of the Secured Indebtedness or modifying or
waiving any obligation, or subordinating, modifying or otherwise dealing with the lien or charge
hereof, (c) accept any additional security, (d) release or otherwise deal with any property, real
or personal, including any or all of the Mortgaged Premises, including making partial releases of
the Mortgaged Premises, or (e) resort to any security agreements, pledges, contracts of guaranty,
assignments of rents and leases or other securities, and exhaust any one or more of said securities
and the security hereunder, either concurrently or independently and in such order as it may
determine. Except for the full satisfaction of Mortgagor’s obligations under the Performance
Agreement or as otherwise provided in Section 3.5 hereof, no act or thing, which but for this
provision could act as a release, termination, satisfaction or impairment of this Mortgage shall in
any way release, terminate, satisfy or impair this Mortgage.

ARTICLE II

Defaults and Remedies

2.1. Events of Default. The occurrence of any one or more of the following events
shall constitute an “Event of Default” under this Mortgage:

	 	a.	 	A Buyer Default under Section 10 of the Performance Agreement;
provided, however, that no default, Event of Default, or Buyer Default shall
exist unless Mortgagee shall first provide Mortgagor with written notice and
seven (7) days during which Mortgagor may cure.

	 	b.	 	The Mortgagor shall fail duly to perform or observe any
covenant or agreement in this Mortgage or the Performance Agreement; provided,
however, that no default or Event of Default shall exist unless Mortgagee shall
first provide Mortgagor with written notice and thirty (30) days during which
Mortgagor may cure, or if such cure requires more than thirty (30) days, such
additional time as necessary provided that Mortgagor promptly initiates steps
sufficient to cure the failure and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.

	 	c.	 	Any statement, representation or warranty made by the Mortgagor
in the Performance Agreement or in this Mortgage shall prove to have been
incorrect or misleading in any material respect when made and the Mortgagor
does not correct such incorrect or misleading statement, representation or
warranty within thirty (30) days of receipt of notice in writing.

Any written notice required by this Section 2.1 shall be delivered in accordance with
Section 12 of the Performance Agreement.

2.2. Remedies. Upon the occurrence of an Event of Default which remains uncured
during the time period provided, or at any time thereafter until such Event of Default is cured to
the satisfaction of the Mortgagee, the Mortgagee may, at its option, and without notice to the
Mortgagor, exercise any or all of the following rights and remedies, and any other rights and
remedies now or then available to it, either hereunder or at law or in equity (except that in no
event shall Mortgagor be liable for punitive, indirect or consequential damages):

	 	a.	 	Subject to the conditions and requirements set forth in the
Performance Agreement (including without limitation the condition that the
Lender has accelerated the “Loan”, as such term is defined in the Performance
Agreement), Mortgagee may declare the entire principal and interest and fees
remaining to be paid by Mortgagee under the Loan to be immediately due and
payable and thereupon all such and all other Secured Indebtedness shall be and
become immediately due and payable to the parties and in the manner set forth
in the Performance Agreement.

	 	b.	 	The Mortgagee may foreclose this Mortgage by action or
advertisement, and the Mortgagor hereby authorizes and fully empowers the
Mortgagee to do so, with full authority to sell the Mortgaged Premises at
public auction and convey the same to the Purchaser in fee simple all in
accordance with and in the manner prescribed by law, and out of the proceeds
arising from sale and foreclosure to apply all amounts that would be owing,
obligated or due as set forth in the Performance Agreement and with respect to
the Secured Indebtedness together with all such sums of money as the Mortgagee
shall have expended or advanced pursuant to this Mortgage or pursuant to
statute together with interest thereon as herein provided and all costs and
expenses of such foreclosure, including lawful and reasonable attorneys’ fees,
with the balance, if any, to be paid to the persons entitled thereto by law.

	 	c.	 	The Mortgagee may collect, receive, and retain all rents,
income, and profits (the “Rents”) from the Mortgaged Premises, either through
the appointment of a receiver or by self help and without appointment of a
receiver.

The Mortgagee shall be entitled as a matter of right without notice and
without giving bond and without regard to the solvency or insolvency of the
Mortgagor, or waste of the Mortgaged Premises or adequacy of the security of
the Mortgaged Premises, to apply for the appointment of a receiver in
accordance with applicable law.

The Rents collected in accordance with this Mortgage, whether collected by a
receiver appointed in accordance with the preceding paragraph and applicable
law or collected directly by the Mortgagee exercising self-help, shall be
applied in the following order, or such other order as mandated by Minnesota
Statutes Sections 559.17 and 576.01, subdivision 2, and applicable successor
statutes: (i) reasonable fees of the receiver, where one is appointed; (ii)
application of tenant security deposits as required by applicable law,
including Minnesota Statutes Section 504B.178 and applicable successor
statutes; (iii) payment when due of prior or current real estate taxes or
special assessments with respect to the Mortgaged Premises, or the periodic
escrow for the payment of the taxes or special assessments; (iv) payment
when due of premiums for insurance of the type required by this Mortgage, or
the periodic escrow for the payment of said premiums; and (v) payment of all
expenses for normal maintenance of the Mortgaged Premises.

Nothing contained in this Mortgage and no actions taken pursuant to this
Mortgage shall be construed as constituting the Mortgagee a mortgagee in
possession.

	 	d.	 	In addition to the rights available to a mortgagee of real
property, the Mortgagee shall also have all the rights, remedies and recourse
available to a secured party under the Uniform Commercial Code, including
without limitation the right to proceed under the provisions of the Uniform
Commercial Code governing default as to any personal property which may be
included in the Mortgaged Premises or which may be deemed nonrealty in a
foreclosure of this Mortgage or to proceed as to such personal property in
accordance with the procedures and remedies available pursuant to a foreclosure
of real estate.

ARTICLE III

Miscellaneous

3.1. Mortgagor’s Acknowledgment of Remedies. THE MORTGAGOR HEREBY CONSENTS AND AGREES
TO THE FORECLOSURE AND SALE OF THE MORTGAGED PREMISES IN ACCORDANCE HEREWITH BY ACTION PURSUANT TO
MINNESOTA STATUTES CHAPTER 581 OR, AT THE OPTION OF THE MORTGAGEE, BY ADVERTISEMENT PURSUANT TO
MINNESOTA STATUTES CHAPTER 580 (OR PURSUANT TO ANY SIMILAR OR REPLACEMENT STATUTES HEREAFTER
ENACTED), WHICH PROVIDES FOR SALE AFTER SERVICE OF NOTICE THEREOF UPON THE OCCUPANT OF THE
MORTGAGED PREMISES AND PUBLICATION OF SAID NOTICE FOR SIX (6) WEEKS IN THE COUNTY IN MINNESOTA
WHERE THE MORTGAGED PREMISES ARE SITUATED; ACKNOWLEDGES THAT NO HEARING OF ANY TYPE IS REQUIRED IN
CONNECTION WITH THE SALE; AND EXCEPT AS MAY BE PROVIDED IN SAID STATUTES EXPRESSLY WAIVES ANY AND
ALL RIGHT TO PRIOR HEARING OF ANY TYPE IN CONNECTION WITH THE SALE OF THE MORTGAGED PREMISES. The
Mortgagor further understands that in the event of such default the Mortgagee may also elect its
rights under the Uniform Commercial Code and take possession of the Personal Property (as defined
in this Mortgage) and dispose of the same by sale or otherwise in one or more parcels provided that
at least ten (10) days’ prior notice of such disposition must be given, all as provided for by the
Uniform Commercial Code, as hereafter amended or by any similar or replacement statute hereafter
enacted. THE MORTGAGOR ACKNOWLEDGES THAT IT IS REPRESENTED BY LEGAL COUNSEL; THAT BEFORE SIGNING
THIS DOCUMENT THIS PARAGRAPH AND THE MORTGAGOR’S RIGHTS WERE FULLY EXPLAINED BY SUCH COUNSEL AND
THAT THE MORTGAGOR UNDERSTANDS THE NATURE AND EXTENT OF THE RIGHTS WAIVED HEREBY AND THE EFFECT OF
SUCH WAIVER.

3.2. Continued Priority. Any agreement hereafter made by the Mortgagor and the
Mortgagee pursuant to this Mortgage shall be superior to the rights of the holder of any
intervening lien or encumbrance.

3.3. Cumulative Rights. Each right, power or remedy herein conferred upon the
Mortgagee is cumulative and in addition to every other right, power or remedy, express or implied,
now or hereafter arising, available to the Mortgagee, at law or in equity, or under the Uniform
Commercial Code or other law, or under any other agreement, and each and every right, power and
remedy herein set forth or otherwise so existing may be exercised from time to time as often and in
such order as may be deemed expedient by the Mortgagee and shall not be a waiver of the right to
exercise at any time thereafter any other right, power or remedy, except that in no event shall
Mortgagor be liable for punitive, indirect or consequential damages. No delay or omission by the
Mortgagee in the exercise of any right, power or remedy arising hereunder or arising otherwise
shall impair any such right, power or remedy or the right of the Mortgagee to resort thereto at a
later date or be construed to be a waiver of any Event of Default or Default under this Mortgage or
the Performance Agreement.

3.4. Waiver. The Mortgagor hereby waives to the full extent lawfully allowed the
benefit of any homestead, appraisement, evaluation, stay and extension laws now or hereafter in
force. The Mortgagor hereby waives any rights available with respect to marshaling of assets so as
to require the separate sales of any portion of the Mortgaged Premises, or as to require the
Mortgagee or any other person to exhaust its remedies against a specific portion of the Mortgaged
Premises before proceeding against the other and does hereby expressly consent to and authorize the
sale of the Mortgaged Premises or any part thereof as a single unit or parcel.

3.5. Satisfaction of Mortgage. Notwithstanding anything herein or in the Performance
Agreement to the contrary, this Mortgage and all assignments herein contained shall be void and
fully satisfied and the lien hereof shall be deemed to be automatically released by the Mortgagee
without any further evidence or documentation by the Mortgagee, upon either of the following
events: (i) the full satisfaction of the Mortgagor’s obligations under the Performance Agreement,
and (ii) the termination, expiration, or release of the lien of the Senior Mortgage. Upon any such
event, Mortgagee shall execute any documentation reasonably requested by Mortgagor in furtherance
of this Section 3.5 without delay and without any cost to the Mortgagor.

3.6. Governing Law. This Mortgage is made and executed under the laws of the State
of Minnesota and is intended to be governed by the laws of said State.

3.7. Binding Effect. This Mortgage and each and every covenant, agreement and other
provision hereof shall be binding upon the Mortgagor and its successors and assigns including
without limitation each and every from time to time record owner of the Mortgaged Premises and any
other person having an interest therein, shall run with the land and shall inure to the benefit of
the Mortgagee and its successors and assigns. As used herein the words “successors and assigns”
shall also be deemed to include the heirs, representatives, administrators and executors of any
natural person who is a party to this Mortgage.

3.8. Severability and Survival. The unenforceability or invalidity of any provisions
hereof shall not render any other provision, or provisions herein contained unenforceable or
invalid. The foreclosure of this Mortgage will not affect or limit any remedy of the Mortgagee on
account of any breach by the Mortgagor of the terms of this Mortgage occurring prior to such
foreclosure, except to the extent of the amount bid at foreclosure.

3.9. Captions. The captions and headings of the various sections of this Mortgage
are for convenience only and are not to be construed as confining or limiting in any way the scope
or intent of the provisions hereof. Whenever the context requires or permits the singular shall
include the plural, the plural shall include the singular and the masculine, feminine and neuter
shall be freely interchangeable.

3.10. Notices. Any notice which any party hereto may desire or may be required to
give to any other party shall be in writing and the mailing thereof by certified mail to their
respective addresses as set forth on page one herein, or to such other places any party hereto may
hereafter by notice in writing designate shall constitute service of notice hereunder.

THE MORTGAGOR REPRESENTS, CERTIFIES, WARRANTS AND AGREES THAT THE MORTGAGOR HAS READ ALL OF
THIS MORTGAGE AND UNDERSTANDS ALL OF THE PROVISIONS OF THIS MORTGAGE. THE MORTGAGOR ALSO AGREES
THAT THE MORTGAGEE’S COMPLIANCE WITH THE EXPRESS PROVISIONS OF THIS MORTGAGE SHALL CONSTITUTE GOOD
FAITH AND SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES.

[Signature page follows.]

1

IN WITNESS WHEREOF, the undersigned has executed this Mortgage as of the day and year first
above-written.

G&E HEALTHCARE REIT II SARTELL MOB, LLC,

a Delaware limited liability company

By: /s/ Danny Prosky

Name: Danny Prosky

Its: Authorized Signatory

Address: c/o Grubb & Ellis Equity Advisors, LLC

1551 North Tustin Avenue, Suite 200

Santa Ana, California 92705

Attn: Danny Prosky

	 	 	 	 	 
	STATE OF CALIFORNIA
	 	 	)	 
	 
	 	) ss
	COUNTY OF ORANGE
	 	 	)	 

The foregoing instrument was acknowledged before me this 31st day of March, 2010 by
Danny Prosky in his capacity as the Authorized Signatory of G&E Healthcare REIT II Sartell MOB,
LLC, a Delaware limited liability company.

/s/ P.C. Han

Notary Public

THIS INSTRUMENT WAS DRAFTED BY:

GRAY PLANT MOOTY

Kevin M. O’Driscoll

1010 West St. Germain, Suite 500

St. Cloud, MN 56301

(320) 252-4414

GP:2735295 v1

EXHIBIT A

LEGAL DESCRIPTION

The following described real property located in Stearns County, Minnesota:

Lots One (1), Two (2), Three (3), Block One (1), REGIONAL MEDICAL ARTS CAMPUS,
according to the plat and survey thereof recorded in the office of the County
Recorder in and for Stearns County, Minnesota;

2

EXHIBIT B

PERMITTED ENCUMBRANCES

1. Rights of tenants under unrecorded leases.

2. Terms and conditions of Regional Medical Arts Campus Final Development Agreement dated December
16, 2004, recorded December 27, 2004, as Document No. 1138148.

3. Easements created and shown on Plat of Regional Medical Arts Campus recorded December 23, 2004,
as Document No. 1138073, as amended by Resolution No. 131-05, vacating a portion of a drainage and
utility easement, recorded June 28, 2005, as Document No. 1158409.

4. Terms and conditions of Declaration of Easements, Development Standards and Protective
Covenants, dated December 9, 2004, recorded December 23, 2004, as Document No. 1138074.

5. Terms and conditions of Declaration of Road Access Restriction dated October 19, 1999, recorded
November 8, 1999, as Document No. 924363.

6. Third-Party Mortgage, Security Agreement, Fixture Financing Statement and Assignment of Leases
and Rents dated September 16, 2005, recorded September 28, 2005, as Document No. 1169890, executed
by Sylvan Holdings, LLC, in favor of Wells Fargo Bank, National Association, in the original
principal amount of $4,000,000.00, amended by Consent and Assumption Agreement dated July 1, 2006,
recorded September 28, 2006, as Document No. 1207487.

7. Fixture Financing Statement of Sylvan Holdings, LLC, debtor, in favor of Wells Fargo Bank, NA,
secured party, recorded October 13, 2005, as Document No. 1171839.

8. Subordination and Attornment Agreement dated September 16, 2005, recorded October 13, 2005, as
Document No. 1171840.

9. Subordination and Attornment Agreement dated September 16, 2005, recorded October 13, 2005, as
Document No. 1171841.

10. Subordination and Attornment Agreement dated September 16, 2005, recorded October 13, 2005, as
Document No. 1171842.

11. Leases in favor of Center for Pain Management, Central Minnesota Neurosciences, indicated by
recorded Subordination and Attornment Agreements recorded as Document Nos. 1171841 and 1171842.

GP:2735295 v3

3EX-10.4

SUBORDINATION AGREEMENT

(MORTGAGE)

NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE REAL PROPERTY
DESCRIBED HEREIN BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER
SECURITY INSTRUMENT.

THIS SUBORDINATION AGREEMENT (this “Agreement”) is entered into as of March 31, 2010, by and
among G&E HEALTHCARE REIT II SARTELL MOB, LLC, a Delaware limited liability company, the owner of
the real property described below (“Owner”), STINGRAY PROPERTIES, LLC, a Minnesota limited
liability company, the present holder of the Subordinated Mortgage defined below (“Mortgagee”), and
WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”).

RECITALS

A. Sylvan Holdings, LLC granted Bank that certain Mortgage, Security Agreement, Fixture
Financing Statement and Assignment of Leases and Rents dated September 16, 2005, and recorded in
the office of the County Recorder for Stearns County, Minnesota on September 28, 2005, as Document
No. 1169890 which was assumed (as mortgagor) by Mortgagee under a Consent and Assumption Agreement
dated July 1, 2006 recorded in the office of the County Recorder for Stearns County, Minnesota on
September 28, 2006, as Document No. 1207487 and is being assumed (as mortgagor) by Owner under a
Consent and Assumption Agreement dated on or about there date hereof and is being amended by a
Modification of Third-Party Mortgage, Security Agreement, Fixture Financing Statement and
Assignment of Leases and Rents dated on or about the date hereof, as the same may be amended,
restated or replaced from time to time (collectively, the “Bank Mortgage”), to secure repayment of
a loan evidenced by a promissory note by Borrower dated as of September 16, 2005, in the principal
amount of $4,000,000 to Bank as amended (the “Bank Loan”) which Bank Mortgage covers the real
property described on Exhibit A attached hereto and incorporated herein by this reference
(the “Property”).

B. Owner has assumed certain obligations to Mortgagee under a Performance of Loan Obligations
and Indemnity Agreement which obligations are or will be secured by a Mortgage, Security Agreement
and Assignment of Leases and Rents dated on or about the date hereof covering the Property (the
“Subordinated Mortgage”).

C. It is a condition of Bank continuing the Bank Loan that the security of the Bank Mortgage
be and at all times remain a lien or charge on the Property prior and superior to the lien or
charge of the Subordinated Mortgage.

D. Under the Mortgage, Bank’s consent is required for the Subordinated Mortgage to be granted
and recorded and Bank so consents on condition that this Agreement be executed and recorded.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agrees as follows:

1. SUBORDINATION.

(a) Subordination. The Bank Mortgage and any and all extensions, renewals,
modifications or replacements thereof shall be and at all times remain a lien or charge on the
Property prior and superior to the Subordinated Mortgage. Mortgagee intentionally and
unconditionally waives, relinquishes and subordinates the priority and superiority of the lien or
charge of the Subordinated Mortgage to the lien or charge on the Property of the Bank Mortgage
(including liens and charges thereunder securing all future advances of the Bank Loan and other
advances contemplated thereunder).

(b) Reliance. Mortgagee acknowledges that Bank, in continuing to extend credit
secured by the Property, including the Bank Loan, is doing so in material reliance on this
Agreement.

(c) Acknowledgments of Mortgagee. Mortgagee acknowledges that it has such information
with respect to the Bank Loan, and any promissory note and other loan documents executed in
connection therewith, as Mortgagee deems necessary in order to grant this subordination.

(d) Entire Agreement. This Agreement constitutes the whole and only agreement between
the parties hereto with regard to the subordination of the Subordinated Mortgage to the lien or
charge of the Bank Mortgage; there are no agreements (written or oral) outside or separate from
this Agreement with respect to the subject matter hereof; and all prior negotiations with respect
thereto, if any, are merged into this Agreement. This Agreement shall supersede and cancel, but
only insofar as would affect the priority between the Subordinated Mortgage and the Bank Mortgage,
any prior agreements as to such subordination, including without limitation those provisions, if
any, contained in the Subordinated Mortgage which provide for the subordination thereof to the lien
of a deed of trust or mortgage affecting all or any portion of the Property.

2. MISCELLANEOUS.

(a) Notices. All notices, requests and demands which any party is required or may
desire to give to any other party under any provision of this Agreement must be in writing
delivered to each party at the address set forth below its signature, or to such other address as
any party may designate by written notice to all other parties. Each such notice, request and
demand shall be deemed given or made as follows: (i) if sent by hand delivery, upon delivery;
(ii) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (iii) if sent by telecopy, upon receipt.

(b) Costs, Expenses and Attorneys’ Fees. If any party hereto institutes any
arbitration or judicial or administrative action or proceeding to enforce any provisions of this
Agreement, or alleging any breach of any provision hereof or seeking damages or any remedy, the
losing party or parties shall pay to the prevailing party or parties all costs and expenses,
including reasonable attorneys’ fees (to include outside counsel fees and all allocated costs of
such prevailing party’s in-house counsel), expended or incurred by the prevailing party or parties
in connection therewith, whether incurred at the trial or appellate level, in an arbitration
proceeding or otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or
motion brought by Bank or any other person) relating to Owner, Mortgagee or any other person or
entity.

(c) Further Assurances. At the request of any party hereto, each other party shall
execute, acknowledge and deliver such other documents and/or instruments as may be reasonably
required by the requesting party in order to carry out the purpose of this Agreement, provided that
no such document or instrument shall modify the rights and obligations of the parties set forth
herein.

(d) Successors; Assigns; Amendment. This Agreement shall be binding upon and inure to
the benefit of the heirs, executors, administrators, legal representatives, successors and assigns
of the parties. This Agreement may be amended or modified only in writing signed by all parties
hereto.

(e) Severability of Provisions. If any provision of this Agreement shall be held to
be prohibited by or invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of such waiver or
other provision or any remaining provisions of this Agreement.

(f) Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute and be construed as
one and the same instrument.

(g) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Minnesota.

[The remainder of this page is intentionally blank. Signature page follows.]

1

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.

BANK:

WELLS FARGO BANK, NATIONAL ASSOCIATION

By: /s/ Roxanne Muehebauer

Name: Roxanne Muehebauer

Title: Assistant Vice President

	 	 	Address: St. Cloud Office

P.O. Box 967

400 South First Street

St. Cloud, MN 56302-0967

Attn: Todd Mather

	 	 	 	 	 	 	 	 	 
	STATE OF MINNESOTA
	 	 	)	 	 	 	 	 
	 
	 	 	 	 	 	) ss

COUNTY OF Sterns)

The foregoing instrument was acknowledged before me this 30th day of March 2010 by
Roxanne Muehebauer, the Assistant Vice President of Wells Fargo Bank, National Association, a
national banking association, on behalf of the association.

/s/ Nancy L. Spaeth

Notary Public

2

OWNER:

G&E HEALTHCARE REIT II SARTELL MOB, LLC,

a Delaware limited liability company

By: /s/ Danny Prosky

Name: Danny Prosky

Its: Authorized Signatory

Address: c/o Grubb & Ellis Equity Advisors, LLC

1551 North Tustin Avenue, Suite 200

Santa Ana, California 92705

Attn: Danny Prosky

	 	 	 	 	 	 	 	 	 
	STATE OF CALIFORNIA
	 	 	)	 
	 
	 	 	 	 	 	) ss
	COUNTY OF ORANGE
	 	 	)	 	 	 	 	 

The foregoing instrument was acknowledged before me this 30th day of March, 2010 by
Danny Prosky in his capacity as the Authorized Signatory of G&E Healthcare REIT II Sartell MOB,
LLC, a Delaware limited liability company.

/s/ P.C. Han

Notary Public

3

MORTGAGEE:

STINGRAY PROPERTIES, LLC,

a Minnesota limited liability company

By: /s/ Gary W. Verkinnes

Name: Gary W. Verkinnes

Its: Chief Manager

Address:

697 Saukview Drive

St. Cloud, MN 56303

	 	 	 	 	 	 	 	 	 
	STATE OF MINNESOTA
	 	 	)	 	 	 	 	 
	 
	 	 	 	 	 	) ss
	COUNTY OF STEARNS
	 	 	)	 	 	 	 	 

The foregoing instrument was acknowledged before me this 31st day of March, 2010 by
Gary W. Verkinnes in his capacity as the Chief Manager of Stingray Properties, LLC, a
Minnesota limited liability company.

/s/ Trudy M. Wiechmann

Notary Public

This Instrument was drafted by:

Nilsson Midness, P.A.

900 Flour Exchange Building

310 Fourth Avenue South

Minneapolis, MN 55415

4

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