10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2009

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period            to

Commission File Number: 1-11852

HEALTHCARE REALTY TRUST INCORPORATED

(Exact name of Registrant as specified in its charter)

Maryland
(State or other jurisdiction of
Incorporation or organization) 62-1507028
(I.R.S. Employer
Identification No.)

3310 West End Avenue
Suite 700
Nashville, Tennessee 37203
(Address of principal executive offices)

(615) 269-8175
(Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common stock, $.01 par value per share	New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act:

None
(Title of Class)

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ       No o

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o       No þ

     Indicate by check mark whether the Registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ       No o

     Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o       No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in rule 12b -2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company o

     Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes o       No þ

     The aggregate market value of the shares of common stock (based upon the closing price of these shares on the New York Stock Exchange, Inc. on June 30, 2009) of the Registrant held by non-affiliates on June 30, 2009 was approximately $973,457,298.

     As of January 31, 2010, 61,390,762 shares of the Registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Registrant’s definitive Proxy Statement relating to the Annual Meeting of Stockholders to be held on May 18, 2010 are incorporated by reference into Part III of this Report.

TABLE OF CONTENTS

		Page
Item 1.	Business		1
Item 1A.	Risk Factors		17
Item 1B.	Unresolved Staff Comments		21
Item 2.	Properties		21
Item 3.	Legal Proceedings		21
Item 4.	Submission of Matters to a Vote of Security Holders		21
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		22
Item 6.	Selected Financial Data		23
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations		24
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		42
Item 8.	Financial Statements and Supplementary Data		43
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		80
Item 9A.	Controls and Procedures		80
Item 9B.	Other Information		82
Item 10.	Directors, Executive Officers and Corporate Governance		83
Item 11.	Executive Compensation		84
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		84
Item 13.	Certain Relationships and Related Transactions, and Director Independence		84
Item 14.	Principal Accountant Fees and Services		84
Item 15.	Exhibits and Financial Statement Schedules		84
SIGNATURES			87
EX-1.1
EX-5
EX-8
EX-10.15
EX-10.16
EX-10.17
EX-21
EX-23.2
EX-31.1
EX-31.2
EX-32

PART I

ITEM 1. BUSINESS

Overview

     Healthcare Realty Trust Incorporated (“Healthcare Realty” or the “Company”) was incorporated in Maryland in 1993 and is a self-managed and self-administered real estate investment trust (“REIT”) that owns, acquires, manages, finances and develops income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States.

     The Company operates so as to qualify as a REIT for federal income tax purposes. As a REIT, the Company is not subject to corporate federal income tax with respect to net income distributed to its stockholders. See “Federal Income Tax Information” in Item 1 of this report.

     As of December 31, 2009, the Company’s real estate property investments, excluding assets held for sale and including an investment in one unconsolidated joint venture, are shown in the table below:

	Number of		Gross Investment					Square Feet
(Dollars and Square Feet in thousands)	Investments		Amount		%			Footage		%
Owned properties:
Master leases
Medical office		17	$	160,880		7.1	%		834		6.7	%
Physician clinics		16		123,611		5.4	%		688		5.6	%
Ambulatory care/surgery		5		33,351		1.4	%		133		1.1	%
Specialty outpatient		3		8,265		0.4	%		37		0.3	%
Specialty inpatient		13		234,624		10.4	%		916		7.4	%
Other		10		45,390		2.0	%		498		4.0	%
		64		606,121		26.7	%		3,106		25.1	%
Property operating agreements
Medical office		8		83,893		3.7	%		621		5.0	%
		8		83,893		3.7	%		621		5.0	%
Multi-tenanted with occupancy leases
Medical office		105		1,380,176		61.2	%		7,965		64.5	%
Physician clinics		15		50,691		2.3	%		331		2.7	%
Ambulatory care/surgery		5		67,293		3.0	%		303		2.5	%
Specialty outpatient		2		5,221		0.2	%		22		0.2	%
		127		1,503,381		66.7	%		8,621		69.9	%
Land Held for Development		—		17,301		0.8	%		—		—
Corporate property		—		14,631		0.6	%		—		—
		—		31,932		1.4	%		—		—
Total owned properties		199		2,225,327		98.5	%		12,348		100.0	%
Mortgage loans:
Medical office		2		14,190		0.6	%		—		—
Physician clinics		2		16,818		0.8	%		—		—
		4		31,008		1.4	%		—		—
Unconsolidated joint venture:
Other		1		1,266		0.1	%		—		—
		1		1,266		0.1	%		—		—
Total real estate investments		204	$	2,257,601		100.0	%		12,348		100.0	%

     The Company provided property management services for 140 healthcare-related properties nationwide, totaling approximately 9.3 million square feet at December 31, 2009. The Company’s portfolio of properties is focused predominantly on outpatient services and medical office segments of the healthcare industry and is diversified by tenant, geographic location and facility type.

1

          The following table details occupancy of the Company’s owned properties by facility type as of December 31, 2009 and 2008.

	Percentage of			Occupancy (1)
	Square Feet			2009			2008
Medical office buildings		76.2	%		88	%		89	%
Physician clinics		8.3	%		92	%		97	%
Ambulatory care/surgery centers		3.6	%		87	%		89	%
Specialty outpatient		0.5	%		63	%		89	%
Specialty inpatient		7.4	%		100	%		100	%
Other		4.0	%		94	%		93	%
Total		100.0	%		90	%		91	%

(1) Occupancy represents the percentage of total rentable square feet leased (including month-to-month and holdover leases) as of December 31, 2009 and 2008, excluding six properties in discontinued operations and 10 properties in lease-up. Properties under financial support or master lease agreements are included at 100% occupancy. Upon expiration of these agreements, occupancy reflects underlying tenant leases in the building.

          As of December 31, 2009, the weighted average remaining years to maturity pursuant to the Company’s long-term master leases, financial support agreements, and multi-tenanted occupancy leases was approximately 5.0 years, with expirations through 2029.

          Below is the Company’s 10-year lease maturity schedule, excluding the six properties classified as held for sale, as of December 31, 2009:

	Annualized							Average
Expiration	Minimum		Number of		Percentage			Square Feet
Year	Rents (1)		Leases		of Revenues			Per Lease
2010	$	29,016		338		13.5	%		3,692
2011		26,946		278		12.6	%		3,928
2012		25,554		236		11.9	%		4,492
2013		31,022		189		14.5	%		6,599
2014		33,001		245		15.4	%		5,140
2015		8,393		56		3.9	%		7,107
2016		10,325		44		4.8	%		8,841
2017		13,532		35		6.3	%		20,855
2018		9,593		59		4.5	%		8,654
2019		9,998		18		4.7	%		8,370
Thereafter		17,146		54		7.9	%		14,021

(1) Represents the annualized minimum rents on leases in-place as of December 31, 2009, excluding the impact of potential lease renewals, future step-ups in rent, sponsor support payments under financial support agreements and straight-line rent.

Business Strategy

          Healthcare Realty’s strategy is to own and operate quality medical office and other outpatient-related facilities that produce stable and growing rental income. Consistent with this strategy, the Company selectively seeks acquisition and development opportunities located on or near the campuses of large, stable healthcare systems. Additionally, the Company provides a broad spectrum of services needed to own, develop, lease, finance and manage its portfolio of healthcare properties.

          The Company’s portfolio focuses on medical office and other outpatient-related facilities associated with large acute care hospitals and leading health systems because it views these facilities as stable, low-risk real estate investments. The nation’s healthcare spending in 2008 was $2.3 trillion. Healthcare spending is currently 16.2% of the nation’s gross national product and is projected to increase to an estimated 19.3% by 2019. Historically, more than half of the nation’s healthcare spending has been received by hospitals and outpatient-related facility tenants. In addition, management believes that the diversity of tenants in the Company’s medical office and other outpatient-related facilities, which includes physicians of nearly two-dozen specialties, as well as surgery, imaging, and diagnostic centers, lowers the Company’s financial and operational risk.

2

          The Company plans to continue to meet its liquidity needs, including funding additional investments in 2010, paying dividends and funding debt service, with cash flows from operations, borrowings under the $550.0 million unsecured credit facility due 2012 (the “Unsecured Credit Facility”), proceeds from mortgage notes receivable repayments, proceeds from sales of real estate investments, proceeds from secured debt borrowings, and additional capital market financings. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” in Item 7 and “Risk Factors” in Item 1A of this report for more discussion concerning the Company’s liquidity and capital resources.

Acquisitions and Dispositions

     Acquisition Activity

          During 2009, the Company acquired approximately $106.4 million in real estate assets and funded a $9.9 million mortgage note receivable. Four of the properties, aggregating approximately $43.9 million, were acquired by a joint venture in which the Company has an 80% controlling interest. These acquisitions were funded with borrowings on the Company’s unsecured credit facilities, the assumption of existing mortgage debt, proceeds from real estate dispositions, and proceeds from various capital market financings. See Note 4 to the Consolidated Financial Statements for more information on these acquisitions.

     Dispositions

          During 2009, the Company disposed of seven real estate properties for approximately $85.7 million in net proceeds. Also, one mortgage note receivable totaling approximately $12.6 million was repaid. Proceeds from these dispositions were used to repay amounts under the Unsecured Credit Facility and to fund additional real estate investments. See Note 4 to the Consolidated Financial Statements for more information on these dispositions.

     2010 Disposition

          In January 2010, pursuant to a purchase option with an operator, the Company disposed of five properties in Virginia. The Company’s aggregate net investment in the buildings was approximately $16.0 million at December 31, 2009. The Company received approximately $19.2 million in net proceeds and $0.8 million in lease termination fees. The Company expects to recognize a gain on sale of approximately $2.7 million, including the write-off of approximately $0.5 million of straight-line rent receivables.

Purchase Options

          Excluding the five properties located in Virginia that were classified as held for sale, the Company had approximately $111.1 million in real estate properties at December 31, 2009 that were subject to exercisable purchase options held by the respective operators and lessees that had not been exercised. On a probability-weighted basis, the Company currently estimates that approximately $32.0 million of these options might be exercised in the future. During 2010, an additional purchase option becomes exercisable on a property in which the Company had a gross investment of approximately $3.1 million at December 31, 2009. The Company does not believe it is likely that the operator will exercise the purchase option in the near future. Other properties may have purchase options exercisable in 2011 and beyond, but the Company does not believe it can reasonably estimate the probability of exercise of these purchase options.

Construction in Progress and Other Commitments

          As of December 31, 2009, the Company had two medical office buildings under construction with budgets totaling $178.2 million and estimated completion dates in the second quarter of 2010 and the third quarter of 2011. At December 31, 2009, the Company had $95.1 million invested in construction in progress, including two parcels of land totaling $17.3 million in land held for future development, and expects to fund $57.0 million, $31.4 million, and $5.2 million in 2010, 2011 and 2012, respectively, on the two projects currently under construction. See Note 14 to the Consolidated Financial Statements for more details on the Company’s construction in progress at December 31, 2009.

          The Company also had various remaining first-generation tenant improvement obligations budgeted as of December 31, 2009 totaling approximately $31.3 million related to properties that were developed by the Company.

          In addition to the projects currently under construction, the Company is financing the development of a six-facility outpatient campus with a budget totaling approximately $72 million. The Company has funded $56.4 million towards the construction of four of the buildings. The Company’s consolidated joint venture acquired three of the buildings and the fourth building was sold to a third party during 2009. These acquisitions are discussed in more detail in Note 4 to the Consolidated Financial Statements. Construction of the remaining two buildings has not yet begun, but the Company expects to fund the remaining $15.6 million during 2010 and 2011. The

3

Company’s consolidated joint venture will have an option to purchase the two remaining buildings at a market price upon completion and full occupancy.

Contractual Obligations

          As of December 31, 2009, the Company had long-term contractual obligations of approximately $1.8 billion, consisting primarily of $1.4 billion of long-term debt obligations. For a more detailed description of these contractual obligations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Contractual Obligations,” in Item 7 of this report.

Competition

          The Company competes for the acquisition and development of real estate properties with private investors, healthcare providers, other healthcare-related REITs, real estate partnerships and financial institutions, among others. The business of acquiring and constructing new healthcare facilities is highly competitive and is subject to price, construction and operating costs, and other competitive pressures.

          The financial performance of all of the Company’s properties is subject to competition from similar properties. The extent to which the Company’s properties are utilized depends upon several factors, including the number of physicians using the healthcare facilities or referring patients there, healthcare employment, competitive systems of healthcare delivery, and the area’s population, size and composition. Private, federal and state payment programs and other laws and regulations may also have an effect on the utilization of the properties. Virtually all of the Company’s properties operate in a competitive environment, and patients and referral sources, including physicians, may change their preferences for a healthcare facility from time to time.

Government Regulation

          The healthcare industry continues to face rising costs in the delivery of healthcare services, increased competition for patients, an economy struggling with high unemployment and a growing population of uninsured patients, higher bad debt expense, changes in reimbursement by private and governmental payors, regulatory scrutiny by federal and state administrative authorities, and pressure on government payment rates from high federal and state budget deficits, thus presenting the industry and its individual participants with uncertainty. These varied changes can affect the economic performance of some or all of the Company’s tenants and clients. The Company cannot predict the degree to which these changes may affect the economic performance of the Company, positively or negatively.

          The facilities owned by the Company and the manner in which they are operated are affected by changes in the reimbursement, licensing and certification policies of federal, state and local governments. Facilities may also be affected by changes in accreditation standards or procedures of accrediting agencies that are recognized by governments in the certification process. In addition, expansion (including the addition of new beds or services or acquisition of medical equipment) and occasionally the discontinuation of services of healthcare facilities are, in some states, subjected to state regulatory approval through “certificate of need” laws and regulations. Loss by a facility of its ability to participate in government-sponsored programs because of licensing, certification or accreditation deficiencies or because of program exclusion resulting from violations of law would have a material adverse effect on facility revenues.

          Although the Company is not a healthcare provider or in a position to refer patients or order services reimbursable by the federal government, to the extent that a healthcare provider leases space from the Company and, in turn, subleases space to physicians or other referral sources at less than a fair market value rental rate, or otherwise arranges for remuneration to such a referral source, the Anti-Kickback Statute (a provision of the Social Security Act addressing illegal remuneration) and, depending on the type of provider the lessee is, the Stark Law (the federal physician self-referral law) could be implicated. The Company’s leases require the lessees to agree to comply with all applicable laws.

          A significant portion of the revenue of healthcare providers is derived from government reimbursement programs, such as the federal Medicare program and the joint federal and state Medicaid program. Although lease payments to the Company are not directly affected by government reimbursement, changes in these programs could adversely affect healthcare providers’ and tenants’ ability to make payments to the Company.

          The Medicare and Medicaid programs are highly regulated and subject to frequent evaluation and change. Government healthcare spending has increased over time; however, changes from year to year in reimbursement methodology, rates and other regulatory requirements have resulted in a challenging operating environment for healthcare providers. Spending on government reimbursement programs is expected to continue to rise significantly over the next 20 years, particularly as the government seeks to expand public insurance programs for the uninsured. While government proposals for achieving universal healthcare coverage and other

4

costly initiatives could benefit healthcare providers by decreasing the level of uninsured patients and bad debt expense, Congress could decide to slow the growth in healthcare spending by limiting Medicare and Medicaid reimbursement rates to healthcare providers, possibly even several years prior to the implementation of expanded health insurance coverage. Reductions in the growth of Medicare and Medicaid payments could have an adverse impact on healthcare providers’ financial condition, in addition to the approximate 30 million patients with low-profit margin public insurance that could crowd out providers’ current levels of private-pay patients. These governmental health insurance reforms could adversely affect the ability of providers to make rental payments. However, the Company expects healthcare providers to continue to adjust to new operating challenges, as they have in the past, by increasing operating efficiency and modifying their strategies for profitable operations and growth. Furthermore, under comprehensive healthcare reform, the Company could benefit from higher demand for medical office space as the newly insured population would require additional healthcare providers and facilities.

          The Company believes its strategic focus on the medical office and outpatient sector of the healthcare industry mitigates risk from changes in public healthcare spending and reimbursement because physician practices generally derive a large portion of their revenue from private insurance and out-of-pocket patient expense. The diversity of the Company’s multi-tenant medical office facilities also provides lower reimbursement risk as payor mix varies from physician to physician, depending on location, specialty, patients, and physician preferences.

Legislative Developments

          Each year, legislative proposals for health policy are introduced in Congress and state legislatures, and regulatory changes are enacted by government agencies. These proposals, individually or in the aggregate, could significantly change the delivery of healthcare services, either nationally or at the state level, if implemented. Among the matters under consideration or recently implemented are:

• comprehensive healthcare reform legislation, currently under consideration in Congress, seeks to provide universal health insurance coverage through tax subsidies, expanded federal health insurance programs, individual and employer mandates for coverage, and health insurance exchanges; to be paid for by cuts to Medicare and Medicaid and increased taxes; also, to include heightened regulations on insurers and pharmaceutical companies and various cost containment initiatives;

• cost containment, quality control and payment system refinements for Medicaid, Medicare and other public funding, such as expansion of pay-for-performance criteria and value-based purchasing programs, bundled provider payments, accountable care organizations, geographic payment variations, comparative effectiveness research, and lower payments for hospital readmissions;

• reform of the Medicare physician fee-for-service reimbursement formula that dictates annual updates in payment rates for physician services;

• prohibitions on additional types of contractual relationships between physicians and the healthcare facilities and providers to which they refer, and related information-collection activities;

• efforts to increase transparency with respect to pricing and financial relationships among healthcare providers and drug/device manufacturers;

• heightened health information technology standards for healthcare providers;

• increased scrutiny of medical errors and conditions acquired inside health facilities;

• patient and drug safety initiatives;

• re-importation of pharmaceuticals;

• pharmaceutical drug pricing and compliance activities under Medicare part D;

• tax law changes affecting non-profit providers;

• immigration reform and related healthcare mandates;

• modifications to increase requirements for facility accessibility by persons with disabilities; and

• facility requirements related to earthquakes and other disasters, including structural retrofitting.

     The Company cannot predict whether any proposals will be adopted or what effect, whether positive or negative, such proposals would have on the Company’s business.

Environmental Matters

          Under various federal, state and local environmental laws, ordinances and regulations, an owner of real property (such as the Company) may be liable for the costs of removal or remediation of certain hazardous or toxic substances at, under or disposed of in connection with such property, as well as certain other potential costs relating to hazardous or toxic substances (including government fines and injuries to persons and adjacent property). Most, if not all, of these laws, ordinances and regulations contain stringent enforcement provisions including, but not limited to, the authority to impose substantial administrative, civil and criminal fines and penalties upon violators. Such laws often impose liability, without regard to whether the owner knew of, or was responsible for, the presence or disposal of such substances and may be imposed on the owner in connection with the activities of an operator of the property.

5

The cost of any required remediation, removal, fines or personal or property damages and the owner’s liability therefore could exceed the value of the property and/or the aggregate assets of the owner. In addition, the presence of such substances, or the failure to properly dispose of or remediate such substances, may adversely affect the owner’s ability to sell or lease such property or to borrow using such property as collateral. A property can also be negatively impacted either through physical contamination or by virtue of an adverse effect on value, from contamination that has or may have emanated from other properties.

          Operations of the properties owned, developed or managed by the Company are and will continue to be subject to numerous federal, state, and local environmental laws, ordinances and regulations, including those relating to the following: the generation, segregation, handling, packaging and disposal of medical wastes; air quality requirements related to operations of generators, incineration devices, or sterilization equipment; facility siting and construction; disposal of non-medical wastes and ash from incinerators; and underground storage tanks. Certain properties owned, developed or managed by the Company contain, and others may contain or at one time may have contained, underground storage tanks that are or were used to store waste oils, petroleum products or other hazardous substances. Such underground storage tanks can be the source of releases of hazardous or toxic materials. Operations of nuclear medicine departments at some properties also involve the use and handling, and subsequent disposal of, radioactive isotopes and similar materials, activities which are closely regulated by the Nuclear Regulatory Commission and state regulatory agencies. In addition, several of the properties were built during the period that asbestos was commonly used in building construction and other such facilities may be acquired by the Company in the future. The presence of such materials could result in significant costs in the event that any asbestos-containing materials requiring immediate removal and/or encapsulation are located in or on any facilities or in the event of any future renovation activities.

          The Company has had environmental site assessments conducted on substantially all of the properties currently owned. These site assessments are limited in scope and provide only an evaluation of potential environmental conditions associated with the property, not compliance assessments of ongoing operations. While it is the Company’s policy to seek indemnification relating to environmental liabilities or conditions, even where leases and sale and purchase agreements do contain such provisions, there can be no assurances that the tenant or seller will be able to fulfill its indemnification obligations. In addition, the terms of the Company’s leases or financial support agreements do not give the Company control over the operational activities of its lessees or healthcare operators, nor will the Company monitor the lessees or healthcare operators with respect to environmental matters.

Insurance

          The Company generally requires its tenants to maintain comprehensive liability and property insurance that covers the Company as well as the tenants. The Company also carries comprehensive liability insurance and property insurance covering its owned and managed properties, including those held under long-term ground leases. In addition, tenants under long-term net master leases are required to carry property insurance covering the Company’s interest in the buildings. The Company has also obtained title insurance with respect to each of the properties it owns, insuring that the Company holds title to each of the properties free and clear of all liens and encumbrances except those approved by the Company.

Employees

          As of December 31, 2009, the Company employed 229 people. The employees are not members of any labor union, and the Company considers its relations with its employees to be excellent.

Federal Income Tax Information

          The Company is and intends to remain qualified as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). As a REIT, the Company’s net income attributable to common stockholders will be exempt from federal taxation to the extent that it is distributed as dividends to stockholders. Distributions to the Company’s stockholders generally will be includable in their income; however, dividends distributed that are in excess of current and/or accumulated earnings and profits will be treated for tax purposes as a return of capital to the extent of a stockholder’s basis and will reduce the basis of the stockholder’s shares.

     Introduction

          The Company is qualified and intends to remain qualified as a REIT for federal income tax purposes under Sections 856 through 860 of the Code. The following discussion addresses the material federal tax considerations relevant to the taxation of the Company and summarizes certain federal income tax consequences that may be relevant to certain stockholders. However, the actual tax consequences of holding particular securities issued by the Company may vary in light of a securities holder’s particular facts and circumstances. Certain holders, such as tax-exempt entities, insurance companies and financial institutions, are generally subject to special rules. In addition, the following discussion does not address issues under any foreign, state or local tax laws. The tax treatment of a holder of any of the securities issued by the Company will vary depending upon the terms of the specific securities acquired by such holder, as well as the holder’s particular situation, and this discussion does not attempt to address aspects of federal income taxation relating to holders of

6

particular securities of the Company. This summary is qualified in its entirety by the applicable Code provisions, rules and regulations promulgated thereunder, and administrative and judicial interpretations thereof. The Code, rules, regulations, and administrative and judicial interpretations are all subject to change at any time (possibly on a retroactive basis).

          The Company is organized and is operating in conformity with the requirements for qualification and taxation as a REIT and intends to continue operating so as to enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code. The Company’s qualification and taxation as a REIT depends upon its ability to meet, through actual annual operating results, the various income, asset, distribution, stock ownership and other tests discussed below. Accordingly, the Company cannot guarantee that the actual results of operations for any one taxable year will satisfy such requirements.

          If the Company were to cease to qualify as a REIT, and the statutory relief provisions were found not to apply, the Company’s income that it distributed to stockholders would be subject to the “double taxation” on earnings (once at the corporate level and again at the stockholder level) that generally results from an investment in the equity securities of a corporation. The distributions would then qualify for the reduced dividend rates created by the Jobs and Growth Tax Relief Reconciliation Act of 2003. However, the reduced dividend rates are scheduled to expire for taxable years beginning after December 31, 2010. Failure to maintain qualification as a REIT would force the Company to significantly reduce its distributions and possibly incur substantial indebtedness or liquidate substantial investments in order to pay the resulting corporate taxes. In addition, the Company, once having obtained REIT status and having thereafter lost such status, would not be eligible to re-elect REIT status for the four subsequent taxable years, unless its failure to maintain its qualification was due to reasonable cause and not willful neglect and certain other requirements were satisfied. In order to elect again to be taxed as a REIT, just as with its original election, the Company would be required to distribute all of its earnings and profits accumulated in any non-REIT taxable year.

     Taxation of the Company

          As long as the Company remains qualified to be taxed as a REIT, it generally will not be subject to federal income taxes on that portion of its ordinary income or capital gain that is currently distributed to stockholders.

          However, the Company will be subject to federal income tax as follows:

• The Company will be taxed at regular corporate rates on any undistributed “real estate investment trust taxable income,” including undistributed net capital gains.

• Under certain circumstances, the Company may be subject to the “alternative minimum tax” on its items of tax preference, if any.

• If the Company has (i) net income from the sale or other disposition of “foreclosure property” that is held primarily for sale to customers in the ordinary course of business, or (ii) other non-qualifying income from foreclosure property, it will be subject to tax on such income at the highest regular corporate rate.

• Any net income that the Company has from prohibited transactions (which are, in general, certain sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business) will be subject to a 100% tax.

• If the Company should fail to satisfy either the 75% or 95% gross income test (as discussed below), and has nonetheless maintained its qualification as a REIT because certain other requirements have been met, it will be subject to a percentage tax calculated by the ratio of REIT taxable income to gross income with certain adjustments multiplied by the gross income attributable to the greater of the amount by which the Company fails the 75% or 95% gross income test.

• If the Company fails to distribute during each year at least the sum of (i) 85% of its REIT ordinary income for such year, (ii) 95% of its REIT capital gain net income for such year, and (iii) any undistributed taxable income from preceding periods, then the Company will be subject to a 4% excise tax on the excess of such required distribution over the amounts actually distributed.

• In the event of a more than de minimis failure of any of the asset tests, as described below under “Asset Tests,” as long as the failure was due to reasonable cause and not to willful neglect, the Company files a description of each asset that caused such failure with the Internal Revenue Services (“IRS”), and disposes of the assets or otherwise complies with the asset tests within six months after the last day of the quarter in which the Company identifies such failure, the Company will pay a tax equal to the greater of $50,000 or 35% of the net income from the nonqualifying assets during the period in which the Company failed to satisfy the asset tests.

• In the event the Company fails to satisfy one or more requirements for REIT qualification, other than the gross income tests and the asset tests, and such failure is due to reasonable cause and not to willful neglect, the Company will be required to pay a penalty of $50,000 for each such failure.

• To the extent that the Company recognizes gain from the disposition of an asset with respect to which there existed “built-in gain” upon its acquisition by the Company from a Subchapter C corporation in a carry-over basis transaction and such disposition occurs within a maximum ten-year recognition period beginning on the date on which it was acquired by the

7

Company, the Company will be subject to federal income tax at the highest regular corporate rate on the amount of its “net recognized built-in gain.”

•

To the extent that the Company has net income from a taxable REIT subsidiary (“TRS”), the TRS will be subject to federal corporate income tax in much the same manner as other non-REIT Subchapter C corporations, with the exceptions that the deductions for interest expense on debt and rental payments made by the TRS to the Company will be limited and a 100% excise tax may be imposed on transactions between the TRS and the Company or the Company’s tenants that are not conducted on an arm’s length basis. A TRS is a corporation in which a REIT owns stock, directly or indirectly, and for which both the REIT and the corporation have made TRS elections.

     Requirements for Qualification as a REIT

          To qualify as a REIT for a taxable year, the Company must have no earnings and profits accumulated in any non-REIT year. The Company also must elect or have in effect an election to be taxed as a REIT and must meet other requirements, some of which are summarized below, including percentage tests relating to the sources of its gross income, the nature of the Company’s assets and the distribution of its income to stockholders. Such election, if properly made and assuming continuing compliance with the qualification tests described herein, will continue in effect for subsequent years.

     Organizational Requirements and Share Ownership Tests

          Section 856(a) of the Code defines a REIT as a corporation, trust or association:

(1)	that is managed by one or more trustees or directors;
(2)	the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of beneficial interest;
(3)	that would be taxable, but for Sections 856 through 860 of the Code, as a domestic corporation;
(4)	that is neither a financial institution nor an insurance company subject to certain provisions of the Code;
(5)	the beneficial ownership of which is held by 100 or more persons, determined without reference to any rules of attribution (the “share ownership test”);
(6)	that during the last half of each taxable year not more than 50% in value of the outstanding stock of which is owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) (the “five or fewer test”); and
(7)	that meets certain other tests, described below, regarding the nature of its income and assets.

          Section 856(b) of the Code provides that conditions (1) through (4), inclusive, must be met during the entire taxable year and that condition (5) must be met during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of fewer than 12 months. The five or fewer test and the share ownership test do not apply to the first taxable year for which an election is made to be treated as a REIT.

          The Company is also required to request annually (within 30 days after the close of its taxable year) from record holders of specified percentages of its shares written information regarding the ownership of such shares. A list of stockholders failing to fully comply with the demand for the written statements is required to be maintained as part of the Company’s records required under the Code. Rather than responding to the Company, the Code allows the stockholder to submit such statement to the IRS with the stockholder’s tax return.

          The Company has issued shares to a sufficient number of people to allow it to satisfy the share ownership test and the five or fewer test. In addition, to assist in complying with the five or fewer test, the Company’s Articles of Incorporation contain provisions restricting share transfers where the transferee (other than specified individuals involved in the formation of the Company, members of their families and certain affiliates, and certain other exceptions) would, after such transfer, own (a) more than 9.9% either in number or value of the outstanding common stock of the Company or (b) more than 9.9% either in number or value of any outstanding preferred stock of the Company. Pension plans and certain other tax-exempt entities have different restrictions on ownership. If, despite this prohibition, stock is acquired increasing a transferee’s ownership to over 9.9% in value of either the outstanding common stock or any preferred stock of the Company, the stock in excess of this 9.9% in value is deemed to be held in trust for transfer at a price that does not

8

exceed what the purported transferee paid for the stock, and, while held in trust, the stock is not entitled to receive dividends or to vote. In addition, under these circumstances, the Company has the right to redeem such stock.

          For purposes of determining whether the five or fewer test (but not the share ownership test) is met, any stock held by a qualified trust (generally, pension plans, profit-sharing plans and other employee retirement trusts) is, generally, treated as held directly by the trust’s beneficiaries in proportion to their actuarial interests in the trust and not as held by the trust.

     Income Tests

          In order to maintain qualification as a REIT, two gross income requirements must be satisfied annually.

• First, at least 75% of the Company’s gross income (excluding gross income from certain sales of property held as inventory or primarily for sale in the ordinary course of business) must be derived from “rents from real property;” “interest on obligations secured by mortgages on real property or on interests in real property;” gain (excluding gross income from certain sales of property held as inventory or primarily for sale in the ordinary course of business) from the sale or other disposition of, and certain other gross income related to, real property (including interests in real property and in mortgages on real property); and income received or accrued within one year of the Company’s receipt of, and attributable to the temporary investment of, “new capital” (any amount received in exchange for stock other than through a dividend reinvestment plan or in a public offering of debt obligations having maturities of at least five years).

• Second, at least 95% of the Company’s gross income (excluding gross income from certain sales of property held as inventory or primarily for sale in the ordinary course of business) must be derived from dividends; interest; “rents from real property;” gain (excluding gross income from certain sales of property held as inventory or primarily for sale in the ordinary course of business) from the sale or other disposition of, and certain other gross income related to, real property (including interests in real property and in mortgages on real property); and gain from the sale or other disposition of stock and securities.

          The Company may temporarily invest its working capital in short-term investments. Although the Company will use its best efforts to ensure that income generated by these investments will be of a type that satisfies the 75% and 95% gross income tests, there can be no assurance in this regard (see the discussion above of the “new capital” rule under the 75% gross income test).

          For an amount received or accrued to qualify for purposes of an applicable gross income test as “rents from real property” or “interest on obligations secured by mortgages on real property or on interests in real property,” the determination of such amount must not depend in whole or in part on the income or profits derived by any person from such property (except that such amount may be based on a fixed percentage or percentages of receipts or sales). In addition, for an amount received or accrued to qualify as “rents from real property,” such amount may not be received or accrued directly or indirectly from a person in which the Company owns directly or indirectly 10% or more of, in the case of a corporation, the total voting power of all voting stock or the total value of all stock, and, in the case of an unincorporated entity, the assets or net profits of such entity (except for certain amounts received or accrued from a TRS in connection with property substantially rented to persons other than a TRS of the Company and other 10%-or-more owned persons or with respect to certain healthcare facilities, if certain conditions are met). The Company leases and intends to lease property only under circumstances such that substantially all, if not all, rents from such property qualify as “rents from real property.” Although it is possible that a tenant could sublease space to a sublessee in whom the Company is deemed to own directly or indirectly 10% or more of the tenant, the Company believes that as a result of the provisions of the Company’s Articles of Incorporation that limit ownership to 9.9%, such occurrence would be unlikely. Application of the 10% ownership rule is, however, dependent upon complex attribution rules provided in the Code and circumstances beyond the control of the Company. Ownership, directly or by attribution, by an unaffiliated third party of more than 10% of the Company’s stock and more than 10% of the stock of any tenant or subtenant would result in a violation of the rule.

          In addition, the Company must not manage its properties or furnish or render services to the tenants of its properties, except through an independent contractor from whom the Company derives no income or through a TRS unless (i) the Company is performing services that are usually or customarily furnished or rendered in connection with the rental of space for occupancy only and the services are of the sort that a tax-exempt organization could perform without being considered in receipt of unrelated business taxable income or (ii) the income earned by the Company for other services furnished or rendered by the Company to tenants of a property or for the management or operation of the property does not exceed a de minimis threshold generally equal to 1% of the income from such property. The Company self-manages some of its properties, but does not believe it provides services to tenants that are outside the exception.

          If rent attributable to personal property leased in connection with a lease of real property is greater than 15% of the total rent received under the lease, then the portion of rent attributable to such personal property will not qualify as “rents from real property.” Generally, this 15% test is applied separately to each lease. The portion of rental income treated as attributable to personal property is

9

determined according to the ratio of the fair market value of the personal property to the total fair market value of the property that is rented. The determination of what fixtures and other property constitute personal property for federal tax purposes is difficult and imprecise. The Company does not have 15% by value of any of its properties classified as personal property. If, however, rent payments do not qualify, for reasons discussed above, as rents from real property for purposes of Section 856 of the Code, it will be more difficult for the Company to meet the 95% and 75% gross income tests and continue to qualify as a REIT.

          The Company is and expects to continue performing third-party management and development services. If the gross income to the Company from this or any other activity producing disqualified income for purposes of the 95% or 75% gross income tests approaches a level that could potentially cause the Company to fail to satisfy these tests, the Company intends to take such corrective action as may be necessary to avoid failing to satisfy the 95% or 75% gross income tests.

          The Company may enter into hedging transactions with respect to one or more of its assets or liabilities. The Company’s hedging activities may include entering into interest rate swaps, caps and floors, options to purchase such items, and futures and forward contracts. Income and gain from “hedging transactions” will be excluded from gross income for purposes of the 95% and 75% gross income tests. A “hedging transaction” includes any transaction entered into in the normal course of the Company’s trade or business primarily to manage the risk of interest rate, price changes or currency fluctuations with respect to borrowings made or to be made, or ordinary obligations incurred or to be incurred, to acquire or carry real estate assets. The Company will be required to clearly identify any such hedging transaction before the close of the day on which it was acquired, originated or entered into. The Company intends to structure any hedging or similar transactions so as not to jeopardize its status as a REIT.

          If the Company were to fail to satisfy one or both of the 75% or 95% gross income tests for any taxable year, it may nevertheless qualify as a REIT for such year if it is entitled to relief under certain provisions of the Code. These relief provisions would generally be available if (i) the Company’s failure to meet such test or tests was due to reasonable cause and not to willful neglect and (ii) following its identification of its failure to meet these tests, the Company files a description of each item of income that fails to meet these tests in a schedule in accordance with Treasury Regulations. It is not possible, however, to know whether the Company would be entitled to the benefit of these relief provisions since the application of the relief provisions is dependent on future facts and circumstances. If these provisions were to apply, the Company would be subjected to tax equal to a percentage tax calculated by the ratio of REIT taxable income to gross income with certain adjustments multiplied by the gross income attributable to the greater of the amount by which the Company failed either of the 75% or the 95% gross income tests.

     Asset Tests

          At the close of each quarter of its taxable year, the Company must also satisfy four tests relating to the nature of its assets.

• At least 75% of the value of the Company’s total assets must consist of real estate assets (including interests in real property and interests in mortgages on real property as well as its allocable share of real estate assets held by joint ventures or partnerships in which the Company participates), cash, cash items and government securities.

• Not more than 25% of the Company’s total assets may be represented by securities other than those includable in the 75% asset class.

• Not more than 25% of the Company’s total assets may be represented by securities of one or more TRS.

• Of the investments included in the 25% asset class, except for TRS, (i) the value of any one issuer’s securities owned by the Company may not exceed 5% of the value of the Company’s total assets, (ii) the Company may not own more than 10% of any one issuer’s outstanding voting securities and (iii) the Company may not hold securities having a value of more than 10% of the total value of the outstanding securities of any one issuer. Securities issued by affiliated qualified REIT subsidiaries (“QRS”), which are corporations wholly owned by the Company, either directly or indirectly, that are not TRS, are not subject to the 25% of total assets limit, the 5% of total assets limit or the 10% of a single issuer’s voting securities limit or the 10% of a single issuer’s value limit. Additionally, “straight debt” and certain other exceptions are not “securities” for purposes of the 10% of a single issuer’s value test. The existence of QRS are ignored, and the assets, income, gain, loss and other attributes of the QRS are treated as being owned or generated by the Company, for federal income tax purposes. The Company currently has 61 subsidiaries and other affiliates that it employs in the conduct of its business.

          If the Company meets the asset tests described above at the close of any quarter, it will not lose its status as a REIT because of a change in value of its assets unless the discrepancy exists immediately after the acquisition of any security or other property that is wholly or partly the result of an acquisition during such quarter. Where a failure to satisfy the asset tests results from an acquisition of securities or other property during a quarter, the failure can be cured by disposition of sufficient non-qualifying assets within 30 days after the close of such quarter. The Company maintains adequate records of the value of its assets to maintain compliance with the asset tests and to

10

take such action as may be required to cure any failure to satisfy the test within 30 days after the close of any quarter. Nevertheless, if the Company were unable to cure within the 30-day cure period, the Company may cure a violation of the 5% asset test or the 10% asset test so long as the value of the asset causing such violation does not exceed the lesser of 1% of the Company’s assets at the end of the relevant quarter or $10 million and the Company disposes of the asset causing the failure or otherwise complies with the asset tests within six months after the last day of the quarter in which the failure to satisfy the asset test is discovered. For violations due to reasonable cause and not due to willful neglect that are larger than this amount, the Company is permitted to avoid disqualification as a REIT after the 30-day cure period by (i) disposing of an amount of assets sufficient to meet the asset tests, (ii) paying a tax equal to the greater of $50,000 or the highest corporate tax rate times the taxable income generated by the non-qualifying asset and (iii) disclosing certain information to the IRS.

     Distribution Requirement

          In order to qualify as a REIT, the Company is required to distribute dividends (other than capital gain dividends) to its stockholders in an amount equal to or greater than the excess of (a) the sum of (i) 90% of the Company’s “real estate investment trust taxable income” (computed without regard to the dividends paid deduction and the Company’s net capital gain) and (ii) 90% of the net income (after tax on such income), if any, from foreclosure property, over (b) the sum of certain non-cash income (from certain imputed rental income and income from transactions inadvertently failing to qualify as like-kind exchanges). These requirements may be waived by the IRS if the Company establishes that it failed to meet them by reason of distributions previously made to meet the requirements of the 4% excise tax described below. To the extent that the Company does not distribute all of its net long-term capital gain and all of its “real estate investment trust taxable income,” it will be subject to tax thereon. In addition, the Company will be subject to a 4% excise tax to the extent it fails within a calendar year to make “required distributions” to its stockholders of 85% of its ordinary income and 95% of its capital gain net income plus the excess, if any, of the “grossed up required distribution” for the preceding calendar year over the amount treated as distributed for such preceding calendar year. For this purpose, the term “grossed up required distribution” for any calendar year is the sum of the taxable income of the Company for the taxable year (without regard to the deduction for dividends paid) and all amounts from earlier years that are not treated as having been distributed under the provision. Dividends declared in the last quarter of the year and paid during the following January will be treated as having been paid and received on December 31 of such earlier year. The Company’s distributions for 2009 were adequate to satisfy its distribution requirement.

          It is possible that the Company, from time to time, may have insufficient cash or other liquid assets to meet the 90% distribution requirement due to timing differences between the actual receipt of income and the actual payment of deductible expenses or dividends on the one hand and the inclusion of such income and deduction of such expenses or dividends in arriving at “real estate investment trust taxable income” on the other hand. The problem of not having adequate cash to make required distributions could also occur as a result of the repayment in cash of principal amounts due on the Company’s outstanding debt, particularly in the case of “balloon” repayments or as a result of capital losses on short-term investments of working capital. Therefore, the Company might find it necessary to arrange for short-term, or possibly long-term, borrowing or new equity financing. If the Company were unable to arrange such borrowing or financing as might be necessary to provide funds for required distributions, its REIT status could be jeopardized.

          Under certain circumstances, the Company may be able to rectify a failure to meet the distribution requirement for a year by paying “deficiency dividends” to stockholders in a later year, which may be included in the Company’s deduction for dividends paid for the earlier year. The Company may be able to avoid being taxed on amounts distributed as deficiency dividends; however, the Company might in certain circumstances remain liable for the 4% excise tax described above.

     Federal Income Tax Treatment of Leases

          The availability to the Company of, among other things, depreciation deductions with respect to the facilities owned and leased by the Company depends upon the treatment of the Company as the owner of the facilities and the classification of the leases of the facilities as true leases, rather than as sales or financing arrangements, for federal income tax purposes. The Company has not requested nor has it received an opinion that it will be treated as the owner of the portion of the facilities constituting real property and that the leases will be treated as true leases of such real property for federal income tax purposes.

     Other Issues

          With respect to property acquired from and leased back to the same or an affiliated party, the IRS could assert that the Company realized prepaid rental income in the year of purchase to the extent that the value of the leased property exceeds the purchase price paid by the Company for that property. In litigated cases involving sale-leasebacks which have considered this issue, courts have concluded that buyers have realized prepaid rent where both parties acknowledged that the purported purchase price for the property was substantially less than fair market value and the purported rents were substantially less than the fair market rentals. Because of the lack of clear precedent and the inherently factual nature of the inquiry, the Company cannot give complete assurance that the IRS could not successfully assert the existence of prepaid rental income in such circumstances. The value of property and the fair market rent for properties involved in sale-leasebacks are inherently factual matters and always subject to challenge.

11

          Additionally, it should be noted that Section 467 of the Code (concerning leases with increasing rents) may apply to those leases of the Company that provide for rents that increase from one period to the next. Section 467 provides that in the case of a so-called “disqualified leaseback agreement,” rental income must be accrued at a constant rate. If such constant rent accrual is required, the Company would recognize rental income in excess of cash rents and, as a result, may fail to have adequate funds available to meet the 90% dividend distribution requirement. “Disqualified leaseback agreements” include leaseback transactions where a principal purpose of providing increasing rent under the agreement is the avoidance of federal income tax. Since the Section 467 regulations provide that rents will not be treated as increasing for tax avoidance purposes where the increases are based upon a fixed percentage of lessee receipts, additional rent provisions of leases containing such clauses should not result in these leases being disqualified leaseback agreements. In addition, the Section 467 regulations provide that leases providing for fluctuations in rents by no more than a reasonable percentage, which is 15% for long-term real property leases, from the average rent payable over the term of the lease will be deemed to not be motivated by tax avoidance. The Company does not believe it has rent subject to the disqualified leaseback provisions of Section 467.

          Subject to a safe harbor exception for annual sales of up to seven properties (or properties with a basis of up to 10% of the REIT’s assets) that have been held for at least four years, gain from sales of property held for sale to customers in the ordinary course of business is subject to a 100% tax. The simultaneous exercise of options to acquire leased property that may be granted to certain tenants or other events could result in sales of properties by the Company that exceed this safe harbor. However, the Company believes that in such event, it will not have held such properties for sale to customers in the ordinary course of business.

     Depreciation of Properties

          For federal income tax purposes, the Company’s real property is being depreciated over 31.5, 39 or 40 years, using the straight-line method of depreciation and its personal property over various periods utilizing accelerated and straight-line methods of depreciation.

     Failure to Qualify as a REIT

          If the Company was to fail to qualify for federal income tax purposes as a REIT in any taxable year, and the relief provisions were found not to apply, the Company would be subject to tax on its taxable income at regular corporate rates (plus any applicable alternative minimum tax). Distributions to stockholders in any year in which the Company failed to qualify would not be deductible by the Company nor would they be required to be made. In such event, to the extent of current and/or accumulated earnings and profits, all distributions to stockholders would be taxable as qualified dividend income, including, presumably, subject to the 15% maximum rate on dividends created by the Jobs and Growth Tax Relief Reconciliation Act of 2003, and, subject to certain limitations in the Code, eligible for the 70% dividends received deduction for corporations that are REIT stockholders. However, this reduced rate for dividend income is set to expire for taxable years beginning after December 31, 2010. Unless entitled to relief under specific statutory provisions, the Company would also be disqualified from taxation as a REIT for the following four taxable years. It is not possible to state whether in all circumstances the Company would be entitled to statutory relief from such disqualification. Failure to qualify for even one year could result in the Company’s incurring substantial indebtedness (to the extent borrowings were feasible) or liquidating substantial investments in order to pay the resulting taxes.

     Taxation of Tax-Exempt Stockholders

          The IRS has issued a revenue ruling in which it held that amounts distributed by a REIT to a tax-exempt employees’ pension trust do not constitute “unrelated business taxable income,” even though the REIT may have financed certain of its activities with acquisition indebtedness. Although revenue rulings are interpretive in nature and are subject to revocation or modification by the IRS, based upon the revenue ruling and the analysis therein, distributions made by the Company to a U.S. stockholder that is a tax-exempt entity (such as an individual retirement account (“IRA”) or a 401(k) plan) should not constitute unrelated business taxable income unless such tax-exempt U.S. stockholder has financed the acquisition of its shares with “acquisition indebtedness” within the meaning of the Code, or the shares are otherwise used in an unrelated trade or business conducted by such U.S. stockholder.

          Special rules apply to certain tax-exempt pension funds (including 401(k) plans but excluding IRAs or government pension plans) that own more than 10% (measured by value) of a “pension-held REIT.” Such a pension fund may be required to treat a certain percentage of all dividends received from the REIT during the year as unrelated business taxable income. The percentage is equal to the ratio of the REIT’s gross income (less direct expenses related thereto) derived from the conduct of unrelated trades or businesses determined as if the REIT were a tax-exempt pension fund (including income from activities financed with “acquisition indebtedness”), to the REIT’s gross income (less direct expenses related thereto) from all sources. The special rules will not require a pension fund to recharacterize a portion of its dividends as unrelated business taxable income unless the percentage computed is at least 5%.

          A REIT will be treated as a “pension-held REIT” if the REIT is predominantly held by tax-exempt pension funds and if the REIT would otherwise fail to satisfy the five or fewer test discussed above. A REIT is predominantly held by tax-exempt pension funds if at least one tax-exempt pension fund holds more than 25% (measured by value) of the REIT’s stock or beneficial interests, or if one or

12

more tax-exempt pension funds (each of which owns more than 10% (measured by value) of the REIT’s stock or beneficial interests) own in the aggregate more than 50% (measured by value) of the REIT’s stock or beneficial interests. The Company believes that it will not be treated as a pension-held REIT. However, because the shares of the Company will be publicly traded, no assurance can be given that the Company is not or will not become a pension-held REIT.

     Taxation of Non-U.S. Stockholders

          The rules governing United States federal income taxation of any person other than (i) a citizen or resident of the United States, (ii) a corporation or partnership created in the United States or under the laws of the United States or of any state thereof, (iii) an estate whose income is includable in income for U.S. federal income tax purposes regardless of its source or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States fiduciaries have the authority to control all substantial decisions of the trust (“Non-U.S. Stockholders”) are highly complex, and the following discussion is intended only as a summary of such rules. Prospective Non-U.S. Stockholders should consult with their own tax advisors to determine the impact of United States federal, state, and local income tax laws on an investment in stock of the Company, including any reporting requirements.

          In general, Non-U.S. Stockholders are subject to regular United States income tax with respect to their investment in stock of the Company in the same manner as a U.S. stockholder if such investment is “effectively connected” with the Non-U.S. Stockholder’s conduct of a trade or business in the United States. A corporate Non-U.S. Stockholder that receives income with respect to its investment in stock of the Company that is (or is treated as) effectively connected with the conduct of a trade or business in the United States also may be subject to the 30% branch profits tax imposed by the Code, which is payable in addition to regular United States corporate income tax. The following discussion addresses only the United States taxation of Non-U.S. Stockholders whose investment in stock of the Company is not effectively connected with the conduct of a trade or business in the United States.

     Ordinary Dividends

          Distributions made by the Company that are not attributable to gain from the sale or exchange by the Company of United States real property interests (“USRPI”) and that are not designated by the Company as capital gain dividends will be treated as ordinary income dividends to the extent made out of current or accumulated earnings and profits of the Company. Generally, such ordinary income dividends will be subject to United States withholding tax at the rate of 30% on the gross amount of the dividend paid unless reduced or eliminated by an applicable United States income tax treaty. The Company expects to withhold United States income tax at the rate of 30% on the gross amount of any such dividends paid to a Non-U.S. Stockholder unless a lower treaty rate applies and the Non-U.S. Stockholder has filed an IRS Form W-8BEN with the Company, certifying the Non-U.S. Stockholder’s entitlement to treaty benefits.

     Non-Dividend Distributions

          Distributions made by the Company in excess of its current and accumulated earnings and profits to a Non-U.S. Stockholder who holds 5% or less of the stock of the Company (after application of certain ownership rules) will not be subject to U.S. income or withholding tax. If it cannot be determined at the time a distribution is made whether or not such distribution will be in excess of the Company’s current and accumulated earnings and profits, the distribution will be subject to withholding at the rate applicable to a dividend distribution. However, the Non-U.S. Stockholder may seek a refund from the IRS of any amount withheld if it is subsequently determined that such distribution was, in fact, in excess of the Company’s then current and accumulated earnings and profits.

     Capital Gain Dividends

          As long as the Company continues to qualify as a REIT, distributions made by the Company after December 31, 2005, that are attributable to gain from the sale or exchange by the Company of any USRPI will not be treated as effectively connected with the conduct of a trade or business in the United States. Instead, such distributions will be treated as REIT dividends that are not capital gains and will not be subject to the branch profits tax as long as the Non-U.S. Stockholder does not hold greater than 5% of the stock of the Company at any time during the one-year period ending on the date of the distribution. Non-U.S. Stockholders who hold more than 5% of the stock of the Company will be treated as if such gains were effectively connected with the conduct of a trade or business in the United States and generally subject to the same capital gains rates applicable to U.S. stockholders. In addition, corporate Non-U.S. Stockholders may also be subject to the 30% branch profits tax and to withholding at the rate of 35% of the gross distribution.

     Disposition of Stock of the Company

          Generally, gain recognized by a Non-U.S. Stockholder upon the sale or exchange of stock of the Company will not be subject to United States taxation unless such stock constitutes a USRPI within the meaning of the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”). The stock of the Company will not constitute a USRPI so long as the Company is a “domestically controlled REIT.” A “domestically controlled REIT” is a REIT in which at all times during a specified testing period less than 50% in value of its stock or

13

beneficial interests are held directly or indirectly by Non-U.S. Stockholders. The Company believes that it will be a “domestically controlled REIT,” and therefore that the sale of stock of the Company will generally not be subject to taxation under FIRPTA. However, because the stock of the Company is publicly traded, no assurance can be given that the Company is or will continue to be a “domestically controlled REIT.”

          Under recently enacted “wash sale” rules applicable to certain dispositions of interests in “domestically controlled REITs,” a Non-U.S. Stockholder could be subject to taxation under FIRPTA on the disposition of stock of the Company if certain conditions are met. If the Company is a “domestically controlled REIT,” a Non-U.S. Stockholder will be treated as having disposed of USRPI, if such Non-U.S. Stockholder disposes of an interest in the Company in an “applicable wash sale transaction.” An “applicable wash sale transaction” is any transaction in which a Non-U.S. Stockholder avoids receiving a distribution from a REIT by (i) disposing of an interest in a “domestically controlled REIT” during the 30-day period preceding a distribution, any portion of which distribution would have been treated as gain from the sale of a USRPI if it had been received by the Non-U.S. Stockholder and (ii) acquiring, or entering into a contract or option to acquire, a substantially identical interest in the REIT during the 61-day period beginning the first day of the 30-day period preceding the distribution. The wash sale rule does not apply to a Non-U.S. Stockholder who actually receives the distribution from the Company or, so long as the Company is publicly traded, to any Non-U.S. Stockholder holding greater than 5% of the outstanding stock of the Company at any time during the one-year period ending on the date of the distribution.

          If the Company did not constitute a “domestically controlled REIT,” gain arising from the sale or exchange by a Non-U.S. Stockholder of stock of the Company would be subject to United States taxation under FIRPTA as a sale of a USRPI unless (i) the stock of the Company is “regularly traded” (as defined in the applicable Treasury regulations) and (ii) the selling Non-U.S. Stockholder’s interest (after application of certain constructive ownership rules) in the Company is 5% or less at all times during the five years preceding the sale or exchange. If gain on the sale or exchange of the stock of the Company were subject to taxation under FIRPTA, the Non-U.S. Stockholder would be subject to regular United States income tax with respect to such gain in the same manner as a U.S. stockholder (subject to any applicable alternative minimum tax, a special alternative minimum tax in the case of nonresident alien individuals and the possible application of the 30% branch profits tax in the case of foreign corporations), and the purchaser of the stock of the Company (including the Company) would be required to withhold and remit to the IRS 10% of the purchase price. Additionally, in such case, distributions on the stock of the Company to the extent they represent a return of capital or capital gain from the sale of the stock of the Company, rather than dividends, would be subject to a 10% withholding tax.

          Capital gains not subject to FIRPTA will nonetheless be taxable in the United States to a Non-U.S. Stockholder in two cases:

• if the Non-U.S. Stockholder’s investment in the stock of the Company is effectively connected with a U.S. trade or business conducted by such Non-U.S. Stockholder, the Non-U.S. Stockholder will be subject to the same treatment as a U.S. stockholder with respect to such gain; or

• if the Non-U.S. Stockholder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and has a “tax home” in the United States, the nonresident alien individual will be subject to a 30% tax on the individual’s capital gain.

     Information Reporting Requirements and Backup Withholding Tax

          The Company will report to its U.S. stockholders and to the IRS the amount of dividends paid during each calendar year and the amount of tax withheld, if any, with respect thereto. Under the backup withholding rules, a U.S. stockholder may be subject to backup withholding, currently at a rate of 28% on dividends paid unless such U.S. stockholder:

• is a corporation or falls within certain other exempt categories and, when required, can demonstrate this fact; or

• provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with applicable requirements of the backup withholding rules.

          A U.S. stockholder who does not provide the Company with his correct taxpayer identification number also may be subject to penalties imposed by the IRS. Any amount paid as backup withholding will be creditable against the U.S. stockholder’s federal income tax liability. In addition, the Company may be required to withhold a portion of any capital gain distributions made to U.S. stockholders who fail to certify their non-foreign status to the Company.

          Additional issues may arise pertaining to information reporting and backup withholding with respect to Non-U.S. Stockholders, and Non-U.S. Stockholders should consult their tax advisors with respect to any such information reporting and backup withholding requirements.

14

     State and Local Taxes

          The Company and its stockholders may be subject to state or local taxation in various state or local jurisdictions, including those in which it or they transact business or reside. The state and local tax treatment of the Company and its stockholders may not conform to the federal income tax consequences discussed above. Consequently, prospective holders should consult their own tax advisors regarding the effect of state and local tax laws on an investment in the stock of the Company.

     Real Estate Investment Trust Tax Proposals

          Investors must recognize that the present federal income tax treatment of the Company may be modified by future legislative, judicial or administrative actions or decisions at any time, which may be retroactive in effect, and, as a result, any such action or decision may affect investments and commitments previously made. The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the Treasury Department, resulting in statutory changes as well as promulgation of new, or revisions to existing, regulations and revised interpretations of established concepts. No prediction can be made as to the likelihood of the passage of any new tax legislation or other provisions either directly or indirectly affecting the Company or its stockholders.

     Other Legislation

          The Jobs and Growth Tax Relief Reconciliation Act of 2003 reduced the maximum individual tax rate for long-term capital gains generally from 20% to 15% (for sales occurring after May 6, 2003 through December 31, 2008) and for dividends generally from 38.6% to 15% (for tax years from 2003 through 2008). These provisions have been extended through the 2010 tax year. Without future congressional action, the maximum tax rate on long-term capital gains will return to 20% in 2011, and the maximum rate on dividends will move to 39.6% in 2011. Because a REIT is not generally subject to federal income tax on the portion of its REIT taxable income or capital gains distributed to its stockholders, distributions of dividends by a REIT are generally not eligible for the new 15% tax rate on dividends. As a result, the Company’s ordinary REIT dividends will continue to be taxed at the higher tax rates (currently, a maximum of 35%) applicable to ordinary income.

ERISA Considerations

          The following is a summary of material considerations arising under ERISA and the prohibited transaction provisions of Section 4975 of the Code that may be relevant to a holder of stock of the Company. This discussion does not propose to deal with all aspects of ERISA or Section 4975 of the Code or, to the extent not preempted, state law that may be relevant to particular employee benefit plan stockholders (including plans subject to Title I of ERISA, other employee benefit plans and IRAs subject to the prohibited transaction provisions of Section 4975 of the Code, and governmental plans and church plans that are exempt from ERISA and Section 4975 of the Code but that may be subject to state law requirements) in light of their particular circumstances.

          A fiduciary making the decision to invest in stock of the Company on behalf of a prospective purchaser which is an ERISA plan, a tax-qualified retirement plan, an IRA or other employee benefit plan is advised to consult its own legal advisor regarding the specific considerations arising under ERISA, Section 4975 of the Code, and (to the extent not preempted) state law with respect to the purchase, ownership or sale of stock by such plan or IRA.

     Employee Benefit Plans, Tax-Qualified Retirement Plans and IRAs

          Each fiduciary of an employee benefit plan subject to Title I of ERISA (an “ERISA Plan”) should carefully consider whether an investment in stock of the Company is consistent with its fiduciary responsibilities under ERISA. In particular, the fiduciary requirements of Part 4 of Title I of ERISA require (i) an ERISA Plan’s investments to be prudent and in the best interests of the ERISA Plan, its participants and beneficiaries, (ii) an ERISA Plan’s investments to be diversified in order to reduce the risk of large losses, unless it is clearly prudent not to do so, (iii) an ERISA Plan’s investments to be authorized under ERISA and the terms of the governing documents of the ERISA Plan and (iv) that the fiduciary not cause the ERISA Plan to enter into transactions prohibited under Section 406 of ERISA. In determining whether an investment in stock of the Company is prudent for purposes of ERISA, the appropriate fiduciary of an ERISA Plan should consider all of the facts and circumstances, including whether the investment is reasonably designed, as a part of the ERISA Plan’s portfolio for which the fiduciary has investment responsibility, to meet the objectives of the ERISA Plan, taking into consideration the risk of loss and opportunity for gain (or other return) from the investment, the diversification, cash flow and funding requirements of the ERISA Plan and the liquidity and current return of the ERISA Plan’s portfolio. A fiduciary should also take into account the nature of the Company’s business, the length of the Company’s operating history and other matters described below under “Risk Factors.”

          The fiduciary of an IRA or of an employee benefit plan not subject to Title I of ERISA because it is a governmental or church plan or because it does not cover common law employees (a “Non-ERISA Plan”) should consider that such an IRA or Non-ERISA Plan

15

may only make investments that are authorized by the appropriate governing documents, not prohibited under Section 4975 of the Code and permitted under applicable state law.

     Status of the Company under ERISA

          A prohibited transaction may occur if the assets of the Company are deemed to be assets of the investing Plans and “parties in interest” or “disqualified persons” as defined in ERISA and Section 4975 of the Code, respectively, deal with such assets. In certain circumstances where a Plan holds an interest in an entity, the assets of the entity are deemed to be Plan assets (the “look-through rule”). Under such circumstances, any person that exercises authority or control with respect to the management or disposition of such assets is a Plan fiduciary. Plan assets are not defined in ERISA or the Code, but the United States Department of Labor issued regulations in 1987 (the “Regulations”) that outline the circumstances under which a Plan’s interest in an entity will be subject to the look-through rule.

          The Regulations apply only to the purchase by a Plan of an “equity interest” in an entity, such as common stock or common shares of beneficial interest of a REIT. However, the Regulations provide an exception to the look-through rule for equity interests that are “publicly-offered securities.”

          Under the Regulations, a “publicly-offered security” is a security that is (i) freely transferable, (ii) part of a class of securities that is widely held and (iii) either (a) part of a class of securities that is registered under section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (b) sold to a Plan as part of an offering of securities to the public pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”) and the class of securities of which such security is a part of is registered under the Securities Act within 120 days (or such longer period allowed by the Securities and Exchange Commission (“SEC”)) after the end of the fiscal year of the issuer during which the offering of such securities to the public occurred. Whether a security is considered “freely transferable” depends on the facts and circumstances of each case. Generally, if the security is part of an offering in which the minimum investment is $10,000 or less, any restriction on or prohibition against any transfer or assignment of such security for the purposes of preventing a termination or reclassification of the entity for federal or state tax purposes will not of itself prevent the security from being considered freely transferable. A class of securities is considered “widely held” if it is a class of securities that is owned by 100 or more investors independent of the issuer and of one another.

          Management believes that the stock of the Company will meet the criteria of the publicly offered securities exception to the look-through rule in that the stock of the Company is freely transferable, the minimum investment is less than $10,000 and the only restrictions upon its transfer are those required under federal income tax laws to maintain the Company’s status as a REIT. Second, stock of the Company is held by 100 or more investors and at least 100 or more of these investors are independent of the Company and of one another. Third, the stock of the Company has been and will be part of offerings of securities to the public pursuant to an effective registration statement under the Securities Exchange Act and will be registered under the Securities Act within 120 days after the end of the fiscal year of the Company during which an offering of such securities to the public occurs. Accordingly, management believes that if a Plan purchases stock of the Company, the Company’s assets should not be deemed to be Plan assets and, therefore, that any person who exercises authority or control with respect to the Company’s assets should not be treated as a Plan fiduciary for purposes of the prohibited transaction rules of ERISA and Section 4975 to the Code.

Available Information

          The Company makes available to the public free of charge through its internet website the Company’s Proxy Statement, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after the Company electronically files such reports with, or furnishes such reports to, the SEC. The Company’s Internet website address is www.healthcarerealty.com.

          The public may read and copy any materials that the Company files with the SEC at the SEC’s Public Reference Room located at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains electronic versions of the Company’s reports on its website at www.sec.gov.

Corporate Governance Principles

          The Company has adopted Corporate Governance Principles relating to the conduct and operations of the Board of Directors. The Corporate Governance Principles are posted on the Company’s website (www.healthcarerealty.com) and are available in print to any stockholder who requests a copy.

16

Committee Charters

          The Board of Directors has an Audit Committee, Compensation Committee, Corporate Governance Committee and Executive Committee. The Board of Directors has adopted written charters for each committee except for the Executive Committee, which are posted on the Company’s website (www.healthcarerealty.com) and are available in print to any stockholder who requests a copy.

Executive Officers

          Information regarding the executive officers of the Company is set forth in Part III, Item 10 of this report and is incorporated herein by reference.

ITEM 1A. RISK FACTORS

          The following are some of the risks and uncertainties that could negatively affect the Company’s financial condition, results of operations, business and prospects. These risks, as well as the risks described in Item 1 under the headings “Competition,” “Government Regulation,” “Environmental Matters,” and “Federal Income Tax Information” and in Item 7 under the heading “Disclosure Regarding Forward-Looking Statements” should be carefully considered before making an investment decision regarding the Company. The risks and uncertainties described below are not the only ones facing the Company, and there may be additional risks that the Company does not presently know of or that the Company currently considers not likely to have a significant impact. If any of the events underlying the following risks actually occurred, the Company’s business, financial condition and operating results could suffer, and the trading price of its common stock could decline.

The unavailability of equity and debt capital, volatility in the credit markets, increases in interest rates, or changes in the Company’s debt ratings could have an adverse effect on the Company’s ability to meet its debt payments, make dividend payments to stockholders or engage in acquisition and development activity.

          A REIT is required by IRS regulations to make dividend distributions, thereby retaining less of its capital for growth. As a result, a REIT typically grows through steady investments of new capital in real estate assets. Presently, the Company has sufficient capital availability. However, there may be times when the Company will have limited access to capital from the equity and/or debt markets. Changes in the Company’s debt ratings could have a material adverse effect on its interest costs and financing sources. The Company’s debt rating can be materially influenced by a number of factors including, but not limited to, acquisitions, investment decisions, and capital management activities. The capital and credit markets have recently experienced volatility and limited the availability of funds. The Company’s ability to access the capital and credit markets may be limited by these or other factors, which could have an impact on its ability to refinance maturing debt, including its unsecured senior notes due 2011 (the “Senior Notes due 2011”), fund dividend payments and operations, acquire healthcare properties and complete construction projects. If the Company is unable to refinance or extend principal payments due at maturity of its various debt instruments, its cash flow may not be sufficient to repay maturing debt and, consequently, make dividend payments to stockholders. If the Company defaults in paying any of its debts or honoring its debt covenants, it could experience cross-defaults among debt instruments, the debts could be accelerated and the Company could be forced to liquidate assets for less than the values it would otherwise receive.

The Company is exposed to increases in interest rates, which could reduce its profitability and adversely impact its ability to refinance existing debt, sell assets or engage in acquisition and development activity.

          The Company receives a significant portion of its revenues by leasing its assets under long-term leases in which the rental rate is generally fixed, subject to annual rent escalators. A significant portion of the Company’s debt will be from time to time subject to floating rates, based on LIBOR or other indices. The generally fixed nature of revenues and the variable rate of certain debt obligations create interest rate risk for the Company. Such increased costs could have the effect of reducing the Company’s profitability and could make the financing of any acquisition or investment activity more costly. Rising interest rates could limit the Company’s ability to refinance existing debt when it matures, such as the Senior Notes due 2011, or cause the Company to pay higher rates upon refinancing. An increase in interest rates also could have the effect of reducing the amounts that third parties might be willing to pay for real estate assets, which could limit the Company’s ability to sell assets at times when it might be advantageous to do so in response to changes in economic conditions.

Covenants in the Company’s debt instruments limit its operational flexibility, and a breach of these covenants could materially affect the Company’s financial condition and results of operations.

          The terms of the Unsecured Credit Facility, the indentures governing the Company’s outstanding senior notes and other debt instruments that the Company may enter into in the future are subject to customary financial and operational covenants. The Company’s continued ability to incur debt and operate its business is subject to compliance with these covenants, which limit operational flexibility. Breaches of these covenants could result in defaults under applicable debt instruments, even if payment obligations are satisfied.

17

Financial and other covenants that limit the Company’s operational flexibility, as well as defaults resulting from a breach of any of these covenants in its debt instruments, could have a material adverse effect on the Company’s financial condition and results of operations.

The Company’s revenues depend on the ability of its tenants and sponsors under its leases and financial support agreements to generate sufficient income from their operations to make loan, rent and support payments to the Company.

          The Company’s revenues are subject to the financial strength of its tenants and sponsors. The Company has no operational control over the business of these tenants and sponsors who face a wide range of economic, competitive, government reimbursement and regulatory pressures and constraints. The slowdown in the economy, decline in the availability of financing from the capital markets, and widened credit spreads have affected, or may in the future adversely affect, the businesses of the Company’s tenants and sponsors to varying degrees. Such conditions may further impact such tenants’ and sponsors’ abilities to meet their obligations to the Company and, in certain cases, could lead to restructurings, disruptions, or bankruptcies of such tenants and sponsors. In turn, these conditions could adversely affect the Company’s revenues and could increase allowances for losses and result in impairment charges, which could decrease net income attributable to common stockholders and equity, and reduce cash flows from operations.

If a healthcare tenant loses its licensure or certification, becomes unable to provide healthcare services, cannot meet its financial obligations to the Company or otherwise vacates a facility, the Company would have to obtain another tenant for the affected facility.

          If the Company loses a tenant or sponsor and is unable to attract another healthcare provider on a timely basis and on acceptable terms, the Company’s cash flows and results of operations could suffer. In addition, many of the Company’s properties are special purpose healthcare facilities that may not be easily adaptable to other uses. Transfers of operations of healthcare facilities are often subject to regulatory approvals not required for transfers of other types of commercial operations and real estate.

If lenders under the Unsecured Credit Facility fail to meet their funding commitments, the Company’s financial position would be negatively impacted.

          Access to external capital on favorable terms is critical to the Company’s success in growing and maintaining its portfolio. If financial institutions within the Unsecured Credit Facility were unwilling or unable to meet their respective funding commitments to the Company, any such failure would have a negative impact on the Company’s operations, financial condition and ability to meet its obligations, including the payment of dividends to stockholders.

Many of the Company’s medical office properties are held under long-term ground leases. These ground leases contain provisions that may limit the Company’s ability to lease, sell, or finance these properties.

          The Company’s ground lease agreements with hospitals and health systems typically contain restrictions that limit building occupancy to physicians on the medical staff of an affiliated hospital and prohibit physician tenants from providing services that compete with the services provided by the affiliated hospital. Ground leases may also contain consent requirements or other restrictions on sale or assignment of the Company’s leasehold interest. These ground lease provisions may limit the Company’s ability to lease, sell, or obtain mortgage financing secured by such properties which, in turn, could adversely affect the income from operations or the proceeds received from a sale. As a ground lessee, the Company is also exposed to the risk of reversion of the property upon expiration of the ground lease term, or an earlier breach by the Company of the ground lease, which may have a material adverse effect on the Company’s business, financial condition and results of operations, the Company’s ability to make distributions to the Company’s stockholders and the trading price of the Company’s common stock.

If the Company is unable to promptly re-let its properties, if the rates upon such re-letting are significantly lower than expected or if the Company is required to undertake significant capital expenditures to attract new tenants, then the Company’s business and results of operations would be adversely affected.

          A significant portion of the Company’s leases will mature over the course of any year. The Company may not be able to re-let space on terms that are favorable to the Company or at all. Further, the Company may be required to make significant capital expenditures to renovate or reconfigure space to attract new tenants. If it is unable to promptly re-let its properties, if the rates upon such re-letting are significantly lower than expected, or if the Company is required to undertake significant capital expenditures in connection with re-letting units, the Company’s business, financial condition and results of operations, the Company’s ability to make distributions to the Company’s stockholders and the trading price of the Company’s common stock may be materially and adversely affected.

18

The Company may incur impairment charges on its real estate properties or other assets.

     The Company performs an annual impairment review on its real estate properties in the third quarter of every fiscal year. In addition, the Company assesses the potential for impairment of identifiable intangible assets and long-lived assets, including real estate properties, whenever events occur or a change in circumstances indicates that the recorded value might not be fully recoverable. At some future date, the Company may determine that an impairment has occurred in the value of one or more of its real estate properties or other assets. In such an event, the Company may be required to recognize an impairment loss which could have a material adverse affect on the Company’s financial condition and results of operations.

The Company may be required to sell certain properties to tenants or sponsors whose leases or financial support agreements provide for options to purchase. The Company may not be able to reinvest the proceeds from sale at rates of return equal to the return received on the properties sold. The Company may recognize asset impairment charges as a result of the exercise of a purchase option.

          At December 31, 2009, the Company had approximately $111.1 million in real estate properties that are subject to exercisable purchase options held by lessees or financial support agreement sponsors that had not been exercised. Other properties have purchase options that become exercisable in 2010 and beyond. The exercise of these purchase options exposes the Company to reinvestment risk. In certain cases, the option purchase price may not be as great as the Company’s capital investment in the property, causing an asset impairment charge. If the Company is unable to reinvest the proceeds of sale at rates of return equal to the return received on the properties that are sold, it may experience a decline in lease revenues and a corresponding material adverse effect on the Company’s business and financial condition, the Company’s ability to make distributions to its stockholders, and the market price of its common stock.

Certain of the Company’s properties are special purpose healthcare facilities and may not be easily adaptable to other uses.

          Some of the Company’s properties are specialized medical facilities. If the Company or the Company’s tenants terminate the leases for these properties or the Company’s tenants lose their regulatory authority to operate such properties, the Company may not be able to locate suitable replacement tenants to lease the properties for their specialized uses. Alternatively, the Company may be required to spend substantial amounts to adapt the properties to other uses. Any loss of revenues and/or additional capital expenditures occurring as a result may have a material adverse effect on the Company’s business, financial condition and results of operations, the Company’s ability to make distributions to its stockholders, and the market price of the Company’s common stock.

The Company is subject to risks associated with the development of properties.

          The Company is subject to certain risks associated with the development of properties including the following:

• The construction of properties generally requires various government and other approvals which may not be received when expected, or at all, which could delay or preclude commencement of construction;

• Unsuccessful development opportunities could result in the recognition of direct expenses which could impact the Company’s results of operations;

• Construction costs could exceed original estimates, which would impact the building’s profitability to the Company;

• Operating expenses could be higher than forecasted;

• Time required to initiate and complete the construction of a property and lease up a completed development property may be greater than originally anticipated, thereby adversely affecting the Company’s cash flow and liquidity;

• Occupancy rates and rents of a completed development property may not be sufficient to make the property profitable to the Company; and

• Favorable capital sources to fund the Company’s development activities may not be available when needed.

     The Company may be unsuccessful in operating new and existing real estate properties.

          The Company’s acquired, developed and existing real estate properties may not perform in accordance with management’s expectations because of many factors including the following:

• The Company’s purchase price for acquired facilities may be based upon a series of market judgments which may be incorrect;

19

• The costs of any improvements required to bring an acquired facility up to standards necessary to establish the market position intended for that facility might exceed budgeted costs;

• The Company may incur unexpected costs in the acquisition, construction or maintenance of real estate assets that could impact its expected returns on such assets; and

• Leasing of real estate properties may not occur within expected timeframes or at expected rental rates.

          Further, the Company can give no assurance that acquisition and development opportunities that will meet management’s investment criteria will be available when needed or anticipated.

     The Company’s long-term master leases and financial support agreements may expire and not be extended.

          Long-term master leases and financial support agreements that are expiring may not be extended. To the extent these properties have vacancies or subleases at lower rates upon expiration, income may decline if the Company is not able to re-let the properties at rental rates that are as high as the former rates.

     The market price of the Company’s stock may be affected adversely by changes in the Company’s dividend policy.

          The ability of the Company to pay dividends is dependent upon its ability to maintain funds from operations and cash flow, to make accretive new investments and to access capital. A failure to maintain dividend payments at current levels could result in a reduction of the market price of the Company’s stock.

Adverse trends in the healthcare service industry may negatively affect the Company’s lease revenues and the values of its investments.

          The healthcare service industry is currently experiencing:

• Regulatory and government reimbursement uncertainty resulting from comprehensive healthcare reform efforts;

• Changing trends in the method of delivery of healthcare services;

• Increased expense for uninsured patients and uncompensated care;

• Increased competition among healthcare providers;

• Continuing pressure by private and governmental payors to contain costs and reimbursements while increasing patients’ access to healthcare services;

• Lower pricing, admissions growth and operating profit margins in an uncertain economy;

• Investment losses;

• Constrained availability of capital;

• Credit downgrades;

• Increased liability insurance expense; and

• Increased scrutiny and formal investigations by federal and state authorities.

          These changes, among others, can adversely affect the economic performance of some or all of the tenants and sponsors who provide financial support to the Company’s investments and, in turn, negatively affect the lease revenues and the value of the Company’s property investments.

20

     The Company is exposed to risks associated with entering new geographic markets.

          The Company’s acquisition and development activities may involve entering geographic markets where the Company has not previously had a presence. The construction and/or acquisition of properties in new geographic areas involves risks, including the risk that the property will not perform as anticipated and the risk that any actual costs for site development and improvements identified in the pre-construction or pre-acquisition due diligence process will exceed estimates. There is, and it is expected that there will continue to be, significant competition for investment opportunities that meet management’s investment criteria, as well as risks associated with obtaining financing for acquisition activities, if necessary.

     The Company may experience uninsured or underinsured losses related to casualty or liability.

          The Company generally requires its tenants to maintain comprehensive liability and property insurance that covers the Company as well as the tenants. The Company also carries comprehensive liability insurance and property insurance covering its owned and managed properties. In addition, tenants under long-term master leases are required to carry property insurance covering the Company’s interest in the buildings. Some types of losses, however, either may be uninsurable or too expensive to insure against. Should an uninsured loss or a loss in excess of insured limits occur, the Company could lose all or a portion of the capital it has invested in a property, as well as the anticipated future revenue from the property. In such an event, the Company might remain obligated for any mortgage debt or other financial obligation related to the property. The Company cannot give assurance that material losses in excess of insurance proceeds will not occur in the future.

     The Company owns facilities that are occupied by tenants that may experience regulatory and legal problems.

          The Company’s tenants and sponsors are subject to a complex system of federal and state regulations relating to the delivery of healthcare services. If a tenant or sponsor experiences regulatory or legal problems, the Company could be at risk for amounts owed to it by the tenant under leases or financial support agreements.

     Failure to maintain its status as a REIT, even in one taxable year, could cause the Company to reduce its dividends dramatically.

          The Company intends to qualify at all times as a REIT under the Code. If in any taxable year the Company does not qualify as a REIT, it would be taxed as a corporation. As a result, the Company could not deduct its distributions to the stockholders in computing its taxable income. Depending upon the circumstances, a REIT that loses its qualification in one year may not be eligible to re-qualify during the four succeeding years. Further, certain transactions or other events could lead to the Company being taxed at rates ranging from four to 100 percent on certain income or gains. For more information about the Company’s status as a REIT, see “Federal Income Tax Information” in Item 1 of this Annual Report on Form 10-K.

ITEM 1B. UNRESOLVED STAFF COMMENTS

          None.

ITEM 2. PROPERTIES

          In addition to the properties described under Item 1, “Business,” in Note 9 to the Consolidated Financial Statements, and in Schedule III of Item 15 of this Annual Report on Form 10-K, the Company leases office space for its headquarters. The Company’s headquarters, located in offices at 3310 West End Avenue in Nashville, Tennessee, are leased from an unrelated third party. The Company’s current lease agreement, which commenced on November 1, 2003, covers approximately 30,934 square feet of rented space and expires on October 31, 2010, with two five-year renewal options. Annual base rent was approximately $656,883 in 2009 with increases of approximately 3.25% annually.

ITEM 3. LEGAL PROCEEDINGS

          The Company is, from time to time, involved in litigation arising in the ordinary course of business and which is expected to be covered by insurance. The Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on the Company’s consolidated financial condition or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          No matter was submitted to a vote of stockholders during the fourth quarter of 2009.

21

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

          Shares of the Company’s common stock are traded on the New York Stock Exchange under the symbol “HR.” As of December 31, 2009, there were approximately 1,322 stockholders of record. The following table sets forth the high and low sales prices per share of common stock and the dividend declared and paid per share of common stock related to the periods indicated.

					Dividends Declared
	High		Low		and Paid per Share
2009
First Quarter	$	23.59	$	12.06	$	0.385
Second Quarter		18.35		13.93		0.385
Third Quarter		23.26		15.78		0.385
Fourth Quarter (Payable on March 4, 2010)		22.77		19.75		0.300
2008
First Quarter	$	27.07	$	22.02	$	0.385
Second Quarter		29.89		23.55		0.385
Third Quarter		32.00		23.45		0.385
Fourth Quarter		29.75		14.29		0.385

          Future dividends will be declared and paid at the discretion of the Board of Directors. The Company’s ability to pay dividends is dependent upon its ability to generate funds from operations, cash flows, and to make accretive new investments.

Equity Compensation Plan Information

          The following table provides information as of December 31, 2009 about the Company’s common stock that may be issued upon grants of restricted stock and the exercise of options, warrants and rights under all of the Company’s existing compensation plans, including the 2007 Employees Stock Incentive Plan and the 2000 Employee Stock Purchase Plan.

					Number of
					Securities
					Remaining Available
	Number of				for Future Issuance
	Securities to be				Under Equity
	Issued upon		Weighted Average		Compensation Plans
	Exercise of		Exercise Price of		(Excluding
	Outstanding		Outstanding		Securities
	Options, Warrants		Options, Warrants		Reflected in the
Plan Category	and Rights (1)		and Rights (1)		First Column)
Equity compensation plans approved by security holders		335,608		—		1,882,074
Equity compensation plans not approved by security holders		—		—		—
Total		335,608		—		1,882,074

(1) The Company is unable to ascertain with specificity the number of securities to be used upon exercise of outstanding rights under the 2000 Employee Stock Purchase Plan or the weighted average exercise price of outstanding rights under that plan. The 2000 Employee Stock Purchase Plan provides that shares of common stock may be purchased at a per share price equal to 85% of the fair market value of the common stock at the beginning of the offering period or a purchase date applicable to such offering period, whichever is lower.

22

ITEM 6. SELECTED FINANCIAL DATA

          The following table sets forth financial information for the Company, which is derived from the Consolidated Financial Statements of the Company:

	Years Ended December 31,
(Dollars in thousands except per share data)	2009			2008 (1) (2)			2007 (1) (2) (3)			2006 (1) (2)			2005 (1) (2)
Statement of Income Data:
Total revenues	$	253,304		$	213,931		$	197,081		$	197,899		$	191,901
Total expenses	$	185,877		$	160,148		$	139,190		$	137,214		$	133,144
Other income (expense)	$	(39,206	)	$	(35,585	)	$	(46,848	)	$	(49,747	)	$	(44,907	)
Income from continuing operations	$	28,221		$	18,198		$	11,043		$	10,938		$	13,850
Discontinued operations	$	22,927		$	23,562		$	49,037		$	28,858		$	38,900
Net income	$	51,148		$	41,760		$	60,080		$	39,796		$	52,750
Less: Net income attributable to noncontrolling interests	$	(57	)	$	(68	)	$	(18	)	$	(77	)	$	(82	)
Net income attributable to common stockholders	$	51,091		$	41,692		$	60,062		$	39,719		$	52,668
Per Share Data:
Basic earnings per common share:
Income from continuing operations	$	0.48		$	0.35		$	0.23		$	0.24		$	0.30
Discontinued operations	$	0.40		$	0.46		$	1.03		$	0.61		$	0.83
Net income attributable to common stockholders	$	0.88		$	0.81		$	1.26		$	0.85		$	1.13
Diluted earnings per common share:
Income from continuing operations	$	0.48		$	0.35		$	0.23		$	0.23		$	0.29
Discontinued operations	$	0.39		$	0.44		$	1.01		$	0.61		$	0.82
Net income attributable to common stockholders	$	0.87		$	0.79		$	1.24		$	0.84		$	1.11
Weighted average common shares outstanding — Basic		58,199,592			51,547,279			47,536,133			46,527,857			46,465,215
Weighted average common shares outstanding — Diluted		59,047,314			52,564,944			48,291,330			47,498,937			47,406,798
Balance Sheet Data (as of the end of the period):
Real estate properties, net	$	1,791,693		$	1,634,364		$	1,351,173		$	1,554,620		$	1,513,247
Mortgage notes receivable	$	31,008		$	59,001		$	30,117		$	73,856		$	105,795
Assets held for sale and discontinued operations, net	$	17,745		$	90,233		$	15,639		$	—		$	21,415
Total assets	$	1,935,764		$	1,864,780		$	1,495,492		$	1,736,603		$	1,747,652
Notes and bonds payable	$	1,046,422		$	940,186		$	785,289		$	849,982		$	778,446
Total stockholders’ equity	$	786,766		$	794,820		$	631,995		$	825,672		$	912,468
Noncontrolling interests	$	3,382		$	1,427		$	—		$	—		$	—
Total equity	$	790,148		$	796,247		$	631,995		$	825,672		$	912,468
Other Data:
Funds from operations — Basic and Diluted (4)	$	97,882		$	85,437		$	73,156		$	101,106		$	107,943
Funds from operations per common share — Basic (4)	$	1.68		$	1.66		$	1.54		$	2.17		$	2.32
Funds from operations per common share — Diluted (4)	$	1.66		$	1.63		$	1.51		$	2.13		$	2.28
Quarterly dividends declared and paid per common share	$	1.54		$	1.54		$	2.09		$	2.64		$	2.63
Special dividend declared and paid per common share	$	—		$	—		$	4.75		$	—		$	—

(1)	The years ended December 31, 2008, 2007, 2006 and 2005 are restated to conform to the discontinued operations presentation for 2009. See Note 5 to the Consolidated Financial Statements for more information on the Company’s discontinued operations at December 31, 2009.
(2)	The years ended December 31, 2008, 2007, 2006 and 2005 are restated to retroactively apply the provisions of FAS ASC No. 810 (previously SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements.”) See Note 1 to the Consolidated Financial Statements.
(3)	The Company completed the sale of its senior living assets in 2007 and paid a $4.75 per share special dividend with a portion of the proceeds.
(4)	See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of funds from operations (“FFO”), including why the Company presents FFO and a reconciliation of net income attributable to common stockholders to FFO.

23

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Disclosure Regarding Forward-Looking Statements

     This report and other materials Healthcare Realty has filed or may file with the Securities and Exchange Commission, as well as information included in oral statements or other written statements made, or to be made, by senior management of the Company, contain, or will contain, disclosures that are “forward-looking statements.” Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “target,” “intend,” “plan,” “estimate,” “project,” “continue,” “should,” “could” and other comparable terms. These forward-looking statements are based on the current plans and expectations of management and are subject to a number of risks and uncertainties that could significantly affect the Company’s current plans and expectations and future financial condition and results.

     Such risks and uncertainties include, among other things, the following:

• The unavailability of equity and debt capital, volatility in the credit markets, increases in interest rates, or changes in the Company’s debt ratings;

• The financial health of the Company’s tenants and sponsors and their ability to make loan and rent payments to the Company;

• The ability and willingness of the Company’s lenders to make their funding commitments to the Company;

• The Company’s long-term master leases and financial support agreements may expire and not be extended;

• Restrictions under ground leases through which the Company holds many of its medical office properties could limit the Company’s ability to lease, sell or finance these properties;

• The ability of the Company to re-let properties on favorable terms as leases expire;

• The Company may incur impairment charges on its assets;

• The Company may be required to sell certain assets through purchase options held by tenants or sponsors and may not be able to reinvest the proceeds from such sales at equal rates of return;

• The construction of properties generally requires various government and other approvals which may not be received;

• Unsuccessful development opportunities could result in the recognition of direct expenses which could impact the Company’s results of operations;

• Construction costs of a development property may exceed original estimates, which could impact its profitability to the Company;

• Time required to lease up a completed development property may be greater than originally anticipated, thereby adversely affecting the Company’s cash flow and liquidity;

• Occupancy rates and rents of a completed development property may not be sufficient to make the property profitable to the Company; and

• Changes in the Company’s dividend policy.

     Other risks, uncertainties and factors that could cause actual results to differ materially from those projected are detailed in Item 1A “Risk Factors” of this report and in other reports filed by the Company with the SEC from time to time.

     The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Stockholders and investors are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in the Company’s filings and reports.

24

Overview

  Business Overview

     The Company is a self-managed and self-administered REIT that owns, acquires, manages, finances, and develops income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. Management believes that by providing a complete spectrum of real estate services, the Company can differentiate its competitive market position, expand its asset base and increase revenues over time.

     The Company’s revenues are mostly derived from rentals on its healthcare real estate properties. The Company incurs operating and administrative expenses, including compensation, office rent and other related occupancy costs, as well as various expenses incurred in connection with managing its existing portfolio and acquiring additional properties. The Company also incurs interest expense on its various debt instruments and depreciation and amortization expense on its real estate portfolio.

     The Company’s real estate portfolio, diversified by facility type, geography, tenant and payor mix, helps mitigate its exposure to fluctuating economic conditions, tenant and sponsor credit risks, and changes in clinical practice patterns.

  Executive Overview

     During 2009, the Company acquired approximately $106.4 million in real estate assets and funded a $9.9 million mortgage note receivable. On the development front, the Company began construction of a 206,000 square foot medical office building in Washington with a budget of approximately $92.2 million, completed the construction of three medical office buildings, located in Texas and Illinois, totaling 342,153 square feet with aggregate budgets of approximately $88.0 million, and continued construction of a 133,000 square foot medical office building in Hawaii with a budget of approximately $86.0 million. The Company believes that its construction projects will provide solid, long-term investment returns and high quality buildings. See Notes 4 and 14 to the Consolidated Financial Statements for more details of the Company’s acquisition and development activities during 2009.

     Management also focused on financing activities during 2009, successfully completing the refinancing of the unsecured credit facility, as well as issuing $300.0 million of unsecured senior notes due 2017 (the “Senior Notes due 2017”) and $80.0 million of mortgage debt. With the completion of these financing transactions, the Company was able to replenish its capacity on its unsecured credit facility, as well as provide additional capacity by increasing its unsecured credit facility from $400.0 million to $550.0 million.

     At December 31, 2009, the Company’s leverage ratio [debt divided by (debt plus stockholders’ equity less intangible assets plus accumulated depreciation)] was approximately 46.5%, with 72.4% of its debt portfolio maturing after 2011. The Company had borrowings outstanding under its unsecured credit facility due 2012 (the “Unsecured Credit Facility”) totaling $50.0 million at December 31, 2009, with a remaining borrowing capacity of $500.0 million.

Trends and Matters Impacting Operating Results

     Management monitors factors and trends important to the Company and REIT industry in order to gauge the potential impact on the operations of the Company. Discussed below are some of the factors and trends that management believes may impact future operations of the Company.

     As of December 31, 2009, approximately 30.4% of the Company’s real estate investments consisted of properties leased to unaffiliated lessees pursuant to long-term net lease agreements or subject to financial support agreements; approximately 66.7% were multi-tenanted properties with shorter-term occupancy leases; and the remaining 2.9% of investments were related to land held for development, corporate property, mortgage notes receivable and one investment in an unconsolidated joint venture which is invested in real estate properties. The Company’s long-term net leases and financial support agreements are generally designed to ensure the continuity of revenues and coverage of costs and expenses relating to the properties by the tenants and the sponsoring healthcare operators. There is no assurance that the Company’s leases and financial support agreements will be extended past their expiration dates, which could impact the Company’s operating results as described in more detail below in “Expiring Leases.”

  Cost of Capital

     During 2009, the Company refinanced its unsecured credit facility due 2010 and subsequently repaid most of the outstanding balance on the facility with $300.0 million of the Senior Notes due 2017 and $80.0 million of mortgage debt issued during the fourth quarter of 2009. The cost of the Company’s short-term borrowings increased upon refinancing the unsecured credit facility on September 30, 2009. The rate of the facility increased from 0.90% over LIBOR with a 0.20% facility fee to 2.80% over LIBOR with a 0.40% facility fee. Also, the Senior Notes due 2017, issued on December 4, 2009, bear interest at a fixed rate of 6.50% per annum, and the mortgage debt

25

due 2016, entered into on November 25, 2009, bears interest at a fixed rate of 7.25%. The additional interest expense that the Company will incur related to the new debt will have a negative impact on its future net income attributable to common stockholders, funds from operations, and cash flows.

  Acquisition Activity

     During 2009, the Company acquired approximately $106.4 million in real estate assets and funded a $9.9 million mortgage note receivable. Four of the properties, aggregating approximately $43.9 million, were acquired by a joint venture in which the Company has an 80% controlling interest. These acquisitions were funded with borrowings on the Company’s unsecured credit facilities, the assumption of existing mortgage debt, proceeds from real estate dispositions, and proceeds from various capital market financings. See Note 4 to the Consolidated Financial Statements for more information on these acquisitions.

  Development Activity

     During 2009, three medical office buildings that were previously under construction with aggregate budgets of approximately $88.0 million commenced operations, and construction began on one medical office building with a budget of approximately $92.2 million, resulting in two medical office buildings remaining in construction in progress at December 31, 2009 with budgets totaling approximately $178.2 million. The Company expects completion of the core and shell of one project with a budget of approximately $86.0 million during the second quarter of 2010 and expects completion of the core and shell of the second project with a budget of approximately $92.2 million during the third quarter of 2011. The three medical office buildings that commenced operations during 2009 are currently in lease-up, which generally takes two to three years before reaching stabilization.

     In addition to the projects currently under construction, the Company is financing the development of a six-facility outpatient campus with a budget totaling approximately $72 million. The Company has funded $56.4 million towards the construction of four of the buildings. The Company’s consolidated joint venture acquired three of the buildings and the fourth building was sold to a third party during 2009. These acquisitions are discussed in more detail in Note 4 to the Consolidated Financial Statements. Construction of the remaining two buildings has not yet begun, but the Company expects to fund the remaining $15.6 million during 2010 and 2011. The Company’s consolidated joint venture will have an option to purchase the two remaining buildings at a market price upon completion and full occupancy.

     The Company’s ability to complete, lease-up and operate these facilities in a given period of time will impact the Company’s results of operations and cash flows. More favorable completion dates, lease-up periods and rental rates will result in improved results of operations and cash flows, while lagging completion dates, lease-up periods and rental rates will likely result in less favorable results of operations and cash flows. The Company’s disclosures regarding projections or estimates of completion dates and leasing may not reflect actual results. See Note 14 to the Consolidated Financial Statements for more information on the Company’s development activities.

  Dispositions

     During 2009, the Company disposed of seven real estate properties for approximately $85.7 million in net proceeds. Also, one mortgage note receivable totaling approximately $12.6 million was repaid. Proceeds from these dispositions were used to repay amounts under the Unsecured Credit Facility and to fund additional real estate investments. See Note 4 to the Consolidated Financial Statements for more information on these dispositions.

  2010 Disposition

     In January 2010, pursuant to a purchase option with an operator, the Company disposed of five properties in Virginia. The Company’s aggregate net investment in the buildings was approximately $16.0 million at December 31, 2009. The Company received approximately $19.2 million in net proceeds and $0.8 million in lease termination fees. The Company expects to recognize a gain on sale of approximately $2.7 million, including the write-off of approximately $0.5 million of straight-line rent receivables.

  Purchase Options

     As discussed in “Liquidity and Capital Resources,” certain of the Company’s leases include purchase option provisions, which if exercised, could require the Company to sell a property to a lessee or operator, which could have a negative impact on the Company’s future results of operations and cash flows.

26

  Expiring Leases

     Master leases on seven of the Company’s properties will expire during 2010. The Company expects to extend the master lease on one of the properties. For the remaining six properties, the Company expects that it will not renew the master leases but will assume any tenant leases in the buildings and will manage the operations of those buildings.

     The Company also has 331 leases in its multi-tenanted buildings that will expire during 2010, with each of the tenants occupying an average of approximately 3,088 square feet. Approximately 78% of these leases, with each tenant occupying on average approximately 2,535 square feet, are related to leases located in on-campus buildings, which traditionally have a high probability of renewal. The 2010 expirations are widely distributed throughout the portfolio and are not concentrated with one tenant, health system or location.

     With the expirations discussed above, the Company expects there could be a short-term negative impact to its results of operations, but anticipates that over time it will be able to re-lease the properties or increase tenant rents to offset any short-term decline in revenue.

  Discontinued Operations

     As discussed in more detail in Note 1 to the Consolidated Financial Statements, a company must present the results of operations of real estate assets disposed of or held for sale as discontinued operations. Therefore, the results of operations from such assets are classified as discontinued operations for the current period, and all prior periods presented are restated to conform to the current period presentation. Readers of the Company’s Consolidated Financial Statements should be aware that each future disposal will result in a change to the presentation of the Company’s operations in the historical Consolidated Statements of Income as previously filed. Such reclassifications to the Consolidated Statements of Income will have no impact on previously reported net income attributable to common stockholders.

Funds from Operations

     Funds from operations (“FFO”) and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”). NAREIT defines FFO as the most commonly accepted and reported measure of a REIT’s operating performance equal to “net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.” Impairment charges may not be added back to net income attributable to common stockholders in calculating FFO, which have the effect of decreasing FFO in the period recorded.

     The comparability of FFO for the three years ended December 31, 2009 was affected by the various acquisitions and dispositions of the Company’s real estate portfolio and the results of operations of the portfolio from period to period, as well as from the commencement of operations of properties that were previously under construction. The comparability of FFO was also impacted by certain unusual items. FFO for 2009 was favorably impacted by a re-measurement gain totaling $2.7 million, or $0.05 per diluted common share, recognized in connection with the acquisition of the remaining interests in a joint venture. FFO for 2008 was favorably impacted by the recognition of a net gain from certain repurchases of its Senior Notes due 2011 and its unsecured senior notes due 2014 (the “Senior Notes due 2014”) totaling approximately $4.1 million, or $0.08 per diluted common share. FFO for 2008 and 2007 was reduced by impairment charges recorded totaling $2.5 million and $7.1 million, or $0.05 and $0.15, respectively, which reduced FFO for each of those years.

     Management believes FFO and FFO per share to be supplemental measures of a REIT’s performance because they provide an understanding of the operating performance of the Company’s properties without giving effect to certain significant non-cash items, primarily depreciation and amortization expense. Historical cost accounting for real estate assets in accordance with generally accepted accounting principles (“GAAP”) assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. The Company believes that by excluding the effect of depreciation, amortization and gains from sales of real estate, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO and FFO per share can facilitate comparisons of operating performance between periods. Management uses FFO and FFO per share to compare and evaluate its own operating results from period to period, and to monitor the operating results of the Company’s peers in the REIT industry. The Company reports FFO and FFO per share because these measures are observed by management to also be the predominant measures used by the REIT industry and by industry analysts to evaluate REITs and because FFO per share is consistently reported, discussed, and compared by research analysts in their notes and publications about REITs. For these reasons, management has deemed it appropriate to disclose and discuss FFO and FFO per share. However, FFO does not represent cash generated from operating activities determined in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs. FFO should not be considered as an alternative to net income attributable to common

27

stockholders as an indicator of the Company’s operating performance or as an alternative to cash flow from operating activities as a measure of liquidity.

     The table below reconciles net income attributable to common stockholders to FFO for the three years ended December 31, 2009.

	Year Ended December 31,
(Dollars in thousands, except per share data)	2009			2008			2007
Net income attributable to common stockholders	$	51,091		$	41,692		$	60,062
Gain on sales of real estate properties		(20,136	)		(10,227	)		(40,405	)
Real estate depreciation and amortization		66,927			53,972			53,499
Total adjustments		46,791			43,745			13,094
Funds from Operations — Basic and Diluted	$	97,882		$	85,437		$	73,156
Funds from Operations per Common Share — Basic	$	1.68		$	1.66		$	1.54
Funds from Operations per Common Share — Diluted	$	1.66		$	1.63		$	1.51
Weighted Average Common Shares Outstanding — Basic		58,199,592			51,547,279			47,536,133
Weighted Average Common Shares Outstanding — Diluted		59,047,314			52,564,944			48,291,330

28

Results of Operations

  2009 Compared to 2008

     The Company’s income from continuing operations and net income attributable to common stockholders for 2009 compared to 2008 was significantly impacted by the Company’s acquisitions of real estate properties in the latter half of 2008 of approximately $337.1 million and in 2009 of approximately $106.4 million. The acquisition of the real estate properties were initially funded at a relatively low interest rate on the Company’s unsecured credit facility until the Company completed its capital financing transactions in the latter part of 2009, which were previously at higher interest rates.

							Change
(Dollars in thousands)	2009			2008			$			%
REVENUES
Master lease rent	$	57,648		$	58,073		$	(425	)		(0.7	)%
Property operating		180,024			136,745			43,279			31.6	%
Straight-line rent		2,027			651			1,376			211.4	%
Mortgage interest		2,646			2,207			439			19.9	%
Other operating		10,959			16,255			(5,296	)		(32.6	)%
		253,304			213,931			39,373			18.4	%
EXPENSES
General and administrative		22,493			23,514			(1,021	)		(4.3	)%
Property operating		95,141			82,223			12,918			15.7	%
Impairment		—			1,600			(1,600	)		—
Bad debts, net of recoveries		537			1,833			(1,296	)		(70.7	)%
Depreciation		62,447			48,129			14,318			29.7	%
Amortization		5,259			2,849			2,410			84.6	%
		185,877			160,148			25,729			16.1	%
OTHER INCOME (EXPENSE)
Gain on extinguishment of debt, net		—			4,102			(4,102	)		—
Re-measurement gain of equity interest upon acquisition		2,701			—			2,701			—
Interest expense		(43,080	)		(42,126	)		(954	)		2.3	%
Interest and other income, net		1,173			2,439			(1,266	)		(51.9	)%
		(39,206	)		(35,585	)		(3,621	)		10.2	%
INCOME FROM CONTINUING OPERATIONS		28,221			18,198			10,023			55.1	%
DISCONTINUED OPERATIONS
Income from discontinued operations		2,813			14,605			(11,792	)		(80.7	)%
Impairments		(22	)		(886	)		864			(97.5	)%
Gain on sales of real estate properties		20,136			9,843			10,293			104.6	%
INCOME FROM DISCONTINUED OPERATIONS		22,927			23,562			(635	)		(2.7	)%
NET INCOME		51,148			41,760			9,388			22.5	%
Less: Net income attributable to noncontrolling interests		(57	)		(68	)		11			(16.2	)%
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	51,091		$	41,692		$	9,399			22.5	%
EARNINGS PER COMMON SHARE
Net income attributable to common stockholders — Basic	$	0.88		$	0.81		$	0.07			8.6	%
Net income attributable to common stockholders — Diluted	$	0.87		$	0.79		$	0.08			10.1	%

     Total revenues from continuing operations for the year ended December 31, 2009 increased $39.4 million, or 18.4%, compared to 2008 mainly for the reasons discussed below:

29

• Master lease rental income decreased $0.4 million, or 0.7%, from 2008 to 2009. Master lease income decreased approximately $4.5 million due to properties whose master leases have expired and the Company began recognizing the underlying tenant rents in property operating income. Partially offsetting this decrease, the Company recognized approximately $2.7 million of additional master lease rental income in 2009 related to its 2009 acquisitions, with the remaining $1.4 million increase related mainly to annual contractual rent increases.

• Property operating income increased $43.3 million, or 31.6%, from 2008 to 2009. The Company’s acquisitions of real estate properties during 2009 and 2008 resulted in additional property operating income in 2009 compared to 2008 of approximately $36.4 million. Also, properties previously under construction that commenced operations during 2008 and 2009 resulted in approximately $1.4 million in additional property operating income from 2008 to 2009, and for properties whose master leases had expired, the Company began recognizing the underlying tenant rents totaling approximately $3.2 million. The remaining increase of approximately $2.3 million was mainly related to annual contractual rent increases, rental increases related to lease renewals and new leases executed with various tenants.

• Straight-line rent increased $1.4 million from 2008 to 2009. Additional straight-line rent recognized on leases subject to straight-lining from properties acquired in 2008 and 2009 was approximately $2.6 million, partially offset by reductions in straight-line rent on leases with contractual rent increases of approximately $1.2 million.

• Mortgage interest income increased $0.4 million, or 19.9%, from 2008 to 2009 due mainly to additional fundings on construction mortgage notes.

• Other operating income decreased $5.3 million, or 32.6%, from 2008 to 2009. The decrease is due primarily to the expirations in 2008 and 2009 of five property operating agreements totaling approximately $3.7 million with one operator and the expiration of replacement rent received from an operator of approximately $1.2 million.

     Total expenses for the year ended December 31, 2009 compared to the year ended December 31, 2008 increased $25.7 million, or 16.1%, mainly for the reasons discussed below:

• General and administrative expenses decreased $1.0 million, or 4.3%, from 2008 to 2009. This decrease was mainly attributable to lower pension costs in 2009 of approximately $1.5 million, net of additional pension expense recorded in 2009 related to the partial settlement of an officer’s pension benefit, and a decrease in acquisition and development costs of approximately $0.7 million. These amounts were partially offset by an increase in other compensation related items of approximately $1.3 million. See Note 11 to the Consolidated Financial Statements for more details on the Company’s pension plans.

• Property operating expenses increased $12.9 million, or 15.7%, from 2008 to 2009. The Company’s real estate acquisitions during 2008 and 2009 resulted in additional property operating expense in 2009 of approximately $13.7 million. Also, the Company recognized additional expense in 2009 of approximately $2.1 million related to properties that were previously under construction and commenced operations during 2008 and 2009 and approximately $1.6 million related to properties whose master leases have expired and the Company began incurring the underlying operating expenses. Partially offsetting these increases were reductions in legal expenses of approximately $3.5 million in 2009 compared to 2008 and in real estate taxes of approximately $0.8 million.

• An impairment charge totaling $1.6 million was recognized in 2008 on patient accounts receivable assigned to the Company as part of a lease termination and debt restructuring in late 2005 related to a physician clinic owned by the Company.

• Bad debt expense decreased $1.3 million from 2008 to 2009 mainly due to a reserve recorded by the Company in 2008 related to additional rental income due from an operator on four properties.

• Depreciation expense increased $14.3 million, or 29.7%, from 2008 to 2009 mainly due to increases of approximately $9.8 million related to the Company’s real estate acquisitions, approximately $1.6 million related to the commencement of operations during 2008 and 2009 of buildings that were previously under construction, as well as approximately $2.9 million related to additional building and tenant improvement expenditures during 2008 and 2009.

• Amortization expense increased $2.4 million, or 84.6% from 2008 to 2009, mainly due to the amortization of lease intangibles associated with properties acquired during 2008 and 2009, partially offset by a decrease in amortization of lease intangibles becoming fully amortized on properties acquired during 2003 and 2004.

30

     Other income (expense) for the year ended December 31, 2009 compared to the year ended December 31, 2008 changed unfavorably by $3.6 million, or 10.2%, mainly for the reasons discussed below:

• The Company recognized a net gain on extinguishment of debt in 2008 of approximately $4.1 million related to repurchases of the Senior Notes due 2011 and 2014, which is discussed in more detail in Note 9 to the Consolidated Financial Statements.

• The Company recognized a $2.7 million gain in 2009 related to the valuation and re-measurement of the Company’s equity interest in a joint venture in connection with the Company’s acquisition of the remaining equity interests in the joint venture.

• Interest expense increased $1.0 million, or 2.3%, from 2008 to 2009. The increase was mainly attributable to additional interest expense of approximately $3.8 million related to mortgage notes payable assumed in the 2008 and 2009 real estate acquisitions, a higher average outstanding balance on the unsecured credit facility of approximately $0.4 million, as well as interest incurred on the Senior Notes due 2017 of approximately $1.5 million and interest on the mortgage debt entered into during 2009 of approximately $0.6 million. These amounts are partially offset by interest savings of approximately $1.9 million related to the repurchases of the Senior Notes due 2011 and 2014 in 2008, as well as an increase in capitalized interest of approximately $3.4 million on development projects during 2009.

• Interest and other income decreased $1.3 million, or 51.9%, from 2008 to 2009. The decrease is primarily a result of additional equity income recognized in 2008 of approximately $1.0 million related to a joint venture investment that the Company accounted for under the equity method until it acquired the remaining interests in the joint venture in 2009, at which time the Company began to consolidate the accounts of the joint venture.

     Income from discontinued operations totaled $22.9 million and $23.6 million for the years ended December 31, 2009 and 2008, respectively, which includes the results of operations, net gains and impairments related to property disposals and properties classified as held for sale. The Company disposed of seven properties in 2009 and seven properties and two parcels of land in 2008. Six properties were classified as held for sale at December 31, 2009. Income from discontinued operations for 2008 also included a $7.2 million fee received from an operator to terminate its financial support agreement with the Company in connection with the disposition of the property.

31

2008 Compared to 2007

     The Company’s net income attributable to common stockholders and net income attributable to common stockholders per share for 2008 compared to 2007 was impacted by senior living asset dispositions in 2007 and the resulting gain on sale. Included in the sale were 56 real estate properties in which the Company had investments totaling approximately $328.4 million ($259.9 million, net), 16 mortgage notes and notes receivable totaling approximately $63.2 million, and certain other assets and liabilities related to the assets. The Company received cash proceeds from the sale totaling approximately $369.4 million, recorded a deferred gain of approximately $5.7 million and recognized a net gain of approximately $40.2 million. The sale also included the 21 properties associated with all of the Company’s variable interest entities (“VIEs”), including the six VIEs that the Company consolidated.

							Change
(Dollars in thousands)	2008			2007			$			%
REVENUES
Master lease rent	$	58,073		$	56,086		$	1,987			3.5	%
Property operating		136,745			121,644			15,101			12.4	%
Straight-line rent		651			959			(308	)		(32.1	)%
Mortgage interest		2,207			1,752			455			26.0	%
Other operating		16,255			16,640			(385	)		(2.3	)%
		213,931			197,081			16,850			8.5	%
EXPENSES
General and administrative		23,514			20,619			2,895			14.0	%
Property operating		82,223			71,680			10,543			14.7	%
Impairment		1,600			—			1,600			—
Bad debts, net of recoveries		1,833			222			1,611			725.7	%
Depreciation		48,129			42,141			5,988			14.2	%
Amortization		2,849			4,528			(1,679	)		(37.1	)%
		160,148			139,190			20,958			15.1	%
OTHER INCOME (EXPENSE)
Gain on extinguishment of debt, net		4,102			—			4,102			—
Interest expense		(42,126	)		(48,307	)		6,181			(12.8	)%
Interest and other income, net		2,439			1,459			980			67.2	%
		(35,585	)		(46,848	)		11,263			(24.0	)%
INCOME FROM CONTINUING OPERATIONS		18,198			11,043			7,155			64.8	%
DISCONTINUED OPERATIONS
Income from discontinued operations		14,605			15,721			(1,116	)		(7.1	)%
Impairments		(886	)		(7,089	)		6,203			(87.5	)%
Gain on sales of real estate properties		9,843			40,405			(30,562	)		(75.6	)%
INCOME FROM DISCONTINUED OPERATIONS		23,562			49,037			(25,475	)		(52.0	)%
NET INCOME		41,760			60,080			(18,320	)		(30.5	)%
Less: Net income attributable to noncontrolling interests		(68	)		(18	)		(50	)		277.8	%
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	41,692		$	60,062		$	(18,370	)		(30.6	)%
EARNINGS PER COMMON SHARE
Net income attributable to common stockholders — Basic	$	0.81		$	1.26		$	(0.45	)		(35.7	)%
Net income attributable to common stockholders — Diluted	$	0.79		$	1.24		$	(0.45	)		(36.3	)%

     Total revenues from continuing operations for the year ended December 31, 2008 increased $16.9 million, or 8.5%, compared to 2007, mainly for the reasons discussed below:

• Master lease rental income increased $2.0 million, or 3.5%, from 2007 to 2008. The majority of the increase was due to annual contractual rent increases from 2007 to 2008 of approximately $1.3 million. During 2008, the Company also

32

	recognized additional master lease rental income totaling approximately $0.2 million related to its 2008 acquisitions and a $0.8 million lease termination fee, offset partially by prior year rental income of the property of approximately $0.3 million.
•	Property operating income increased $15.1 million, or 12.4%, from 2007 to 2008. The Company’s acquisitions of real estate properties during 2008 and 2007 resulted in additional property operating income in 2008 compared to 2007 of approximately $6.7 million. Also, properties previously under construction that commenced operations during 2007 and 2008 resulted in approximately $2.9 million in additional property operating income from 2007 to 2008. The remaining increase of approximately $5.5 million was related generally to annual contractual rent increases, rental increases related to lease renewals and new leases executed with various tenants.
•	Mortgage interest income increased $0.5 million, or 26.0%, from 2007 to 2008 due mainly to additional fundings on construction mortgage notes.

     Total expenses for the year ended December 31, 2008 compared to the year ended December 31, 2007 increased $21.0 million, or 15.1%, mainly for the reasons discussed below:

• General and administrative expenses increased $2.9 million, or 14.0%, from 2007 to 2008. This increase was attributable mainly to higher compensation-related expenses in 2008 of approximately $1.8 million related to annual salary increases and amortization of restricted shares, an increase in pension expense recorded of approximately $0.7 million and expenses recognized related to acquisition and development efforts of approximately $1.8 million. Also, the Company recorded a charge in 2007 of approximately $1.5 million related to the retirement of an officer and the termination of five employees.

• Property operating expenses increased $10.5 million, or 14.7%, from 2007 to 2008. The Company recognized expense of approximately $2.7 million related to properties that were previously under construction and commenced operations during 2007 and 2008. Also, the Company’s acquisitions of real estate properties during 2008 and 2007 resulted in additional property operating expense in 2008 compared to 2007 of approximately $2.7 million. In addition, legal expense increased approximately $3.5 million in 2008 compared to 2007 mainly due to legal fee reimbursements received in 2007 and a litigation settlement of $1.0 million in 2008. Also, utility and real estate tax rate increases in 2008 resulted in additional expenses of approximately $1.3 million and $0.6 million, respectively.

• An impairment charge totaling $1.6 million was recognized in 2008 on patient accounts receivable assigned to the Company as part of a lease termination and debt restructuring in late 2005 related to a physician clinic owned by the Company. See Note 6 to the Consolidated Financial Statements.

• Bad debt expense increased $1.6 million from 2007 to 2008 mainly due to a reserve recorded by the Company in 2008 related to additional rental income due from an operator on four properties.

• Depreciation expense increased $6.0 million, or 14.2%, from 2007 to 2008 mainly due to increases related to the acquisitions of real estate properties of approximately $1.4 million, the commencement of operations of buildings during 2007 and 2008 that were previously under construction of approximately $1.0 million, as well as approximately $3.6 million related to additional building and tenant improvement expenditures during 2007 and 2008.

• Amortization expense decreased $1.7 million, or 37.1% from 2007 to 2008, mainly due to a decrease in amortization of lease intangibles associated with properties acquired during 2003 and 2004 becoming fully amortized, offset partially by amortization of lease intangibles related to properties acquired during 2007 and 2008.

     Other income (expense) for the year ended December 31, 2008 compared to the year ended December 31, 2007 improved $11.3 million, or 24.0%, mainly for the reasons discussed below:

• The Company recognized a net gain on extinguishment of debt in 2008 of approximately $4.1 million related to repurchases of the Company’s Senior Notes due 2011 and 2014 which is discussed in more detail in Note 9 to the Consolidated Financial Statements.

• Interest expense decreased $6.2 million, or 12.8%, from 2007 to 2008. The decrease was mainly attributable to an increase in the capitalization of interest of approximately $2.7 million related to the Company’s construction projects, interest savings of approximately $1.0 million related to repurchases of the Senior Notes due 2011 and 2014 and a reduction of interest expense of approximately $3.1 million related mainly to a decrease in interest rates in 2008 compared to 2007 on the unsecured credit facility.

33

• Interest and other income increased $1.0 million, or 67.2%, from 2007 to 2008. In connection with the Company’s acquisition of the remaining interest in a joint venture in which it previously had an equity interest and the related transition of accounting from the joint venture to the Company, the joint venture recorded an adjustment to straight-line rent on the properties. As such, the Company recognized its portion of the adjustment through equity income on the joint venture of approximately $1.1 million (of which $0.8 million was related to prior years). Also, the Company recorded a gain on the sale of a land parcel of approximately $0.4 million. These amounts are partially offset by a reduction in income recognized on one joint venture of approximately $0.4 million due to the partial repurchase of the Company’s preferred equity investment.

     Income from discontinued operations totaled $23.6 million and $49.0 million for the years ended December 31, 2008 and 2007, respectively, which includes the results of operations, net gains and impairments related to property disposals and properties classified as held for sale. The Company disposed of seven properties and two parcels of land in 2008 and 59 properties in 2007, and had six properties classified as held for sale at December 31, 2009. Income from discontinued operations for 2008 also included a $7.2 million fee received from an operator to terminate its financial support agreement with the Company in connection with the disposition of the property.

Liquidity and Capital Resources

     The Company derives most of its revenues from its real estate property portfolio based on contractual arrangements with its tenants and sponsors. The Company may, from time to time, also generate funds from capital market financings, sales of real estate properties or mortgages, borrowings under the Unsecured Credit Facility, secured debt borrowings, or from other private debt or equity offerings. For the year ended December 31, 2009, the Company generated approximately $103.2 million in cash from operations and used $101.5 million in total cash for investing and financing activities, including dividend payments, as detailed in the Company’s Consolidated Statements of Cash Flows.

  Cost of Capital

     On September 30, 2009, the Company refinanced its Unsecured Credit Facility and repaid most of the outstanding balance on the Unsecured Credit Facility with the $300.0 million of Senior Notes due 2017 and the $80.0 million of mortgage debt entered into during the fourth quarter of 2009. The cost of the Company’s short-term borrowings increased upon refinancing the Unsecured Credit Facility. The rate of the facility increased from 0.90% over LIBOR with a 0.20% facility fee to 2.80% over LIBOR with a 0.40% facility fee. Also, the unsecured notes due 2017, issued on December 4, 2009, bear interest at a fixed rate of 6.50% per annum and the mortgage debt due 2016, entered into on November 25, 2009, bears interest at a fixed rate of 7.25%.

     The additional interest expense that the Company will incur related to the new debt will have a negative impact on its future consolidated net income attributable to common stockholders, funds from operations, and cash flows.

  Key Indicators

     The Company monitors its liquidity and capital resources and relies on several key indicators in its assessment of capital markets for financing acquisitions and other operating activities as needed, including the following:

• Debt metrics;

• Dividend payout percentage; and

• Interest rates, underlying treasury rates, debt market spreads and equity markets.

     The Company uses these indicators and others to compare its operations to its peers and to help identify areas in which the Company may need to focus its attention.

34

     Contractual Obligations

          The Company monitors its contractual obligations to ensure funds are available to meet obligations when due. The following table represents the Company’s long-term contractual obligations for which the Company was making payments at December 31, 2009, including interest payments due where applicable. At December 31, 2009, the Company had no long-term capital lease or purchase obligations.

	Payments Due by Period
			Less than		1 -3		3 - 5		More than 5
(Dollars in thousands)	Total		1 Year		Years		Years		Years
Long-term debt obligations, including interest (1)	$	1,438,767	$	61,427	$	438,995	$	349,017	$	589,328
Operating lease commitments (2)		269,104		4,107		7,183		7,235		250,579
Construction in progress (3)		100,442		57,036		36,577		6,829		—
Tenant improvements (4)		—		—		—		—		—
Pension obligations (5)		2,581		2,581		—		—		—
Total contractual obligations	$	1,810,894	$	125,151	$	482,755	$	363,081	$	839,907

(1) The amounts shown include estimated interest on total debt other than the Unsecured Credit Facility. Excluded from the table above are the premium on the Senior Notes due 2011 of $0.4 million, the discount on the Senior Notes due 2014 of $0.6 million, and the discount on the Senior Notes due 2017 of $2.0 million which are included in notes and bonds payable on the Company’s Consolidated Balance Sheet as of December 31, 2009. Also excluded from the table above are discounts on five mortgage notes payable, totaling approximately $7.7 million. The Company’s long-term debt principal obligations are presented in more detail in the table below.

	Principal		Principal
	Balance at		Balance at			Contractual Interest
	December 31,		December 31,			Rates at December	Principal	Interest
(In thousands)	2009		2008		Maturity Date	31, 2009	Payments	Payments
Unsecured Credit Facility due 2010 (a)	$	—	$	329.0	1/10	LIBOR + 0.90%	At maturity	Quarterly
Unsecured Credit Facility due 2012 (a)		50.0		—	9/12	LIBOR + 2.80%	At maturity	Quarterly
Senior Notes due 2011		286.3		286.3	5/11	8.125%	At maturity	Semi-Annual
Senior Notes due 2014		264.7		264.7	4/14	5.125%	At maturity	Semi-Annual
Senior Notes due 2017		300.0		—	1/17	6.500%	At maturity	Semi-Annual
Mortgage Notes Payable		155.4		67.7	5/15-10/30	5.000%-7.765%	Monthly	Monthly
	$	1,056.4	$	947.7

(a) In September 2009, the Company entered into a $550.0 million amended and restated Unsecured Credit Facility due in 2012 and incurred an annual facility fee of 0.40%. The new credit facility replaced the Company’s $400.0 million Unsecured Credit Facility due 2010 in which it incurred an annual facility fee of 0.20%.

(2)	Includes primarily the corporate office and ground leases, with expiration dates through 2101, related to various real estate investments for which the Company is currently making payments.
(3)	Includes cash flow projections related to the construction of two buildings, a portion of which relates to tenant improvements that will generally be funded after the core and shell of the building is substantially completed.
(4)	The Company has various first-generation tenant improvements budgeted as of December 31, 2009 totaling approximately $31.3 million related to properties that were developed by the Company that the Company may fund for tenant improvements as leases are signed. The Company has not included these budgeted amounts in the table above.
(5)	At December 31, 2009, one employee, the Company’s chief executive officer, was eligible to retire under the Executive Retirement Plan. If the chief executive officer retired and received full retirement benefits based upon the terms of the plan, the future benefits to be paid are estimated to be approximately $29.9 million as of December 31, 2009. In 2008, the Company froze the maximum annual benefit payable under the Executive Retirement Plan at $896,000, which resulted in a reduction of benefits payable to the Company’s chief executive officer. In consideration of the curtailment and as a partial settlement of the plan, the Company made a one-time cash payment of $2.3 million to its chief executive officer in early 2009. Because the Company does not know when its chief executive officer will retire, it has not projected when the retirement benefits would be paid in this table. At December 31, 2009, the Company had recorded a $16.1 million liability, included in other liabilities, related to its pension plan obligations. Also, in November 2009, the Company terminated its Retirement Plan for Outside Directors. As a result, lump sum payments totaling approximately $2.6 million will be paid in November 2010, or earlier upon retirement, to the outside directors that participated in the plan, which are included in the table above.

35

          The Company has a $550.0 million Unsecured Credit Facility with a syndicate of 16 lenders. Loans outstanding under the Unsecured Credit Facility will bear interest at a rate equal to (x) LIBOR or the base rate (defined as the highest of (i) the Federal Funds Rate plus 0.5%; (ii) the Bank of America prime rate and (iii) LIBOR) plus (y) a margin ranging from 2.15% to 3.20% (currently 2.80%) for LIBOR-based loans and 0.90% to 1.95% for base rate loans (currently 1.55%), based upon the Company’s unsecured debt ratings. In addition, the Company pays a facility fee per annum on the aggregate amount of commitments. The facility fee is 0.40% per annum, unless the Company’s credit rating falls below a BBB-/Baa3, at which point the facility fee would be 0.50%. As of December 31, 2009, the Company had $50.0 million outstanding on the Unsecured Credit Facility with a remaining borrowing capacity of $500.0 million. At December 31, 2009, 72.4% of the Company’s debt balances were due after 2011, and the Unsecured Credit Facility, the Company’s only variable rate debt, was approximately 4.8% of total outstanding debt. The Unsecured Credit Facility contains certain representations, warranties, and financial and other covenants customary in such loan agreements.

          Moody’s Investors Service, Standard and Poor’s, and Fitch Ratings rate the Company’s senior debt Baa3, BBB-, and BBB, respectively. For the year ended December 31, 2009, the Company’s earnings from continuing operations covered fixed charges at a ratio of 1.33 to 1.00; the Company’s stockholders’ equity totaled approximately $786.8 million; and the Company’s leverage ratio [debt divided by (debt plus stockholders’ equity less intangible assets plus accumulated depreciation)] was approximately 46.5%.

          As of December 31, 2009, the Company was in compliance with its financial covenant provisions under its various debt instruments.

     At-The-Market Equity Offering Program

          On December 31, 2008, the Company entered into a sales agreement with Cantor Fitzgerald & Co. to sell up to 2,600,000 shares of its common stock through an at-the-market equity offering program under which Cantor Fitzgerald acts as agent and/or principal. During 2009, the Company sold 1,201,600 shares of common stock, at prices ranging from $21.62 per share to $22.50 per share, generating approximately $25.7 million in net proceeds. In January 2010, the Company sold an additional 698,700 shares of common stock under the plan for net proceeds totaling approximately $14.9 million. On February 22, 2010, the Company entered into a new sales agreement with Cantor Fitzgerald to sell up to 5,000,000 shares of its common stock through the at-the-market equity offering program. The 5,000,000 shares include 699,700 shares that remained unsold under the prior sales agreement and 4,300,300 new shares. This agreement supersedes the prior sales agreement.

     Security Deposits and Letters of Credit

          As of December 31, 2009, the Company held approximately $6.2 million in letters of credit, security deposits, and capital replacement reserves for the benefit of the Company in the event the obligated lessee or borrower fails to perform under the terms of its respective lease or mortgage. Generally, the Company may, at its discretion and upon notification to the operator or tenant, draw upon these instruments if there are any defaults under the leases or mortgage notes.

     Acquisition Activity

          During 2009, the Company acquired approximately $106.4 million in real estate assets and funded a $9.9 million mortgage note receivable. Four of the properties, aggregating approximately $43.9 million, were acquired by a joint venture in which the Company has an 80% controlling interest. These acquisitions were funded with borrowings on the Company’s unsecured credit facilities, the assumption of existing mortgage debt, proceeds from real estate dispositions, and proceeds from various capital market financings. See Note 4 to the Consolidated Financial Statements for more information on these acquisitions.

     Dispositions

          During 2009, the Company disposed of seven real estate properties for approximately $85.7 million in net proceeds. Also, one mortgage note receivable totaling approximately $12.6 million was repaid. Proceeds from these dispositions were used to repay amounts under the Unsecured Credit Facility and to fund additional real estate investments. See Note 4 to the Consolidated Financial Statements for more information on these dispositions.

     2010 Disposition

          In January 2010, pursuant to a purchase option with an operator, the Company disposed of five properties in Virginia. The Company’s aggregate net investment in the buildings was approximately $16.0 million at December 31, 2009. The Company received approximately $19.2 million in net proceeds and $0.8 million in lease termination fees. The Company expects to recognize a gain on sale of approximately $2.7 million, including the write-off of approximately $0.5 million of straight-line rent receivables.

36

     Purchase Options

          Excluding the five properties located in Virginia that were classified as held for sale, the Company had approximately $111.1 million in real estate properties at December 31, 2009 that were subject to exercisable purchase options held by the respective operators and lessees that had not been exercised. On a probability-weighted basis, the Company currently estimates that approximately $32.0 million of these options might be exercised in the future. During 2010, an additional purchase option becomes exercisable on a property in which the Company had a gross investment of approximately $3.1 million at December 31, 2009. The Company does not believe it is likely that the operator will exercise the purchase option in the near future. Other properties may have purchase options exercisable in 2011 and beyond, but the Company does not believe it can reasonably estimate the probability of exercise of these purchase options.

     Construction in Progress and Other Commitments

          As of December 31, 2009, the Company had two medical office buildings under construction with budgets totaling $178.2 million and estimated completion dates in the second quarter of 2010 and the third quarter of 2011. At December 31, 2009, the Company had $95.1 million invested in construction in progress, including two parcels of land totaling $17.3 million in land held for future development, and expects to fund $57.0 million, $31.4 million, and $5.2 million in 2010, 2011 and 2012, respectively, on the two projects currently under construction. See Note 14 to the Consolidated Financial Statements for more details on the Company’s construction in progress at December 31, 2009.

          The Company also had various remaining first-generation tenant improvement obligations budgeted as of December 31, 2009 totaling approximately $31.3 million related to properties that were developed by the Company.

          In addition to the projects currently under construction, the Company is financing the development of a six-facility outpatient campus with a budget totaling approximately $72 million. The Company has funded $56.4 million towards the construction of four of the buildings. The Company’s consolidated joint venture acquired three of the buildings and the fourth building was sold to a third party during 2009. These acquisitions are discussed in more detail in Note 4 to the Consolidated Financial Statements. Construction of the remaining two buildings has not yet begun, but the Company expects to fund the remaining $15.6 million during 2010 and 2011. The Company’s consolidated joint venture will have an option to purchase the two remaining buildings at a market price upon completion and full occupancy.

          The Company intends to fund these commitments with internally generated cash flows, proceeds from the Unsecured Credit Facility, proceeds from the sale of real estate properties, proceeds from repayments of mortgage notes receivable, proceeds from secured debt, capital market financings, or private debt or equity offerings.

     Operating Leases

          As of December 31, 2009, the Company was obligated under operating lease agreements consisting primarily of the Company’s corporate office lease and ground leases related to 42 real estate investments, excluding leases the Company has prepaid. These operating leases have expiration dates through 2101. Rental expense relating to the operating leases for the years ended December 31, 2009, 2008 and 2007 was $3.8 million, $3.3 million, and $3.0 million, respectively.

     Dividends

          The Company is required to pay dividends to its stockholders at least equal to 90% of its taxable income in order to maintain its qualification as a real estate investment trust. Common stock cash dividends paid during 2009 or related to 2009 are shown in the table below:

	Quarterly
Quarter	Dividend		Date of Declaration	Date of Record	Date Paid/*Payable
4th Quarter 2008	$	0.385	February 3, 2009	February 20, 2009	March 5, 2009
1st Quarter 2009	$	0.385	May 11, 2009	May 22, 2009	June 5, 2009
2nd Quarter 2009	$	0.385	August 10, 2009	August 21, 2009	September 4, 2009
3rd Quarter 2009	$	0.385	November 9, 2009	November 20, 2009	December 4, 2009
4th Quarter 2009	$	0.300	February 2, 2010	February 18, 2010	*March 4, 2010

          The ability of the Company to pay dividends is dependent upon its ability to generate funds from operations and cash flows and to make accretive new investments.

37

     Liquidity

          Net cash provided by operating activities was $103.2 million, $105.3 million and $90.9 million for 2009, 2008 and 2007, respectively. The Company’s cash flows are dependent upon rental rates on leases, occupancy levels of the multi-tenanted buildings, acquisition and disposition activity during the year, and the level of operating expenses, among other factors.

          The Company plans to continue to meet its liquidity needs, including funding additional investments in 2010, paying dividends, and funding debt service, with cash flows from operations, borrowings under the Unsecured Credit Facility, proceeds of mortgage notes receivable repayments, proceeds from sales of real estate investments, proceeds from secured debt borrowings, or additional capital market financings. The Company also had unencumbered real estate assets of approximately $1.9 billion at December 31, 2009, which could serve as collateral for secured mortgage financing. The Company believes that its liquidity and sources of capital are adequate to satisfy its cash requirements. The Company cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to the Company in sufficient amounts to meet its liquidity needs.

          The Company has some exposure to variable interest rates and its stock price has been impacted by the volatility in the stock markets. However, the Company’s leases, which provide its main source of income and cash flow, are generally fixed in nature, have terms of approximately one to 15 years and have lease rates that generally increase on an annual basis at fixed rates or based on consumer price indices.

     Impact of Inflation

          Inflation has not significantly affected the Company’s earnings due to the moderate inflation rate in recent years and the fact that most of the Company’s leases and financial support arrangements require tenants and sponsors to pay all or some portion of the increases in operating expenses, thereby reducing the Company’s risk to the adverse effects of inflation. In addition, inflation has the effect of increasing gross revenue the Company is to receive under the terms of certain leases and financial support arrangements. Leases and financial support arrangements vary in the remaining terms of obligations, further reducing the Company’s risk to any adverse effects of inflation. Interest payable under the Unsecured Credit Facility is calculated at a variable rate; therefore, the amount of interest payable under the Unsecured Credit Facility is influenced by changes in short-term rates, which tend to be sensitive to inflation. During periods where interest rate increases outpace inflation, the Company’s operating results should be negatively impacted. Conversely, when increases in inflation outpace increases in interest rates, the Company’s operating results should be positively impacted.

     New Accounting Pronouncements

          Note 1 to the Consolidated Financial Statements provides a discussion of new accounting standards. The Company does not believe these new standards will have a significant impact on the Company’s Consolidated Financial Statements or results of operations.

     Market Risk

          The Company is exposed to market risk in the form of changing interest rates on its debt and mortgage notes receivable. Management uses regular monitoring of market conditions and analysis techniques to manage this risk.

          At December 31, 2009, approximately $996.4 million, or 95.2%, of the Company’s total debt, bore interest at fixed rates. Additionally, $30.0 million of the Company’s mortgage notes and other notes receivable bore interest at fixed rates.

          The following table provides information regarding the sensitivity of certain of the Company’s financial instruments, as described above, to market conditions and changes resulting from changes in interest rates. For purposes of this analysis, sensitivity is demonstrated based on hypothetical 10% changes in the underlying market interest rates.

38

					Impact on Earnings and Cash Flows
	Outstanding				Assuming 10%			Assuming 10%
	Principal Balance		Calculated Annual		Increase in Market			Decrease in Market
(Dollars in thousands)	As of 12/31/09		Interest Expense (1)		Interest Rates			Interest Rates
Variable Rate Debt:
Unsecured Credit Facility	$	50,000	$	1,515	$	(12	)	$	12
Variable Rate Receivables:
Mortgage Notes Receivable	$	4,290	$	267	$	1		$	(1	)

			Fair Value
					Assuming 10%		Assuming 10%
	Carrying Value				Increase in		Decrease in
	at December 31,		December 31,		Market Interest		Market Interest		December 31,
(Dollars in thousands)	2009		2009		Rates		Rates		2008 (2)
Fixed Rate Debt:
Senior Notes due 2011, including premium	$	286,655	$	307,568	$	307,231	$	307,883	$	320,269
Senior Notes due 2014, net of discount		264,090		282,883		280,328		285,497		298,025
Senior Notes due 2017, net of discount		297,988		297,988		292,779		304,680		—
Mortgage Notes Payable		147,689		150,115		146,151		154,352		94,590
	$	996,422	$	1,038,554	$	1,026,489	$	1,052,412	$	712,884
Fixed Rate Receivables:
Mortgage Notes Receivable	$	26,718	$	26,485	$	25,547	$	27,463	$	16,597
Other Notes Receivable		3,276		3,276		3,225		3,328		487
	$	29,994	$	29,761	$	28,772	$	30,791	$	17,084

(1)

Annual interest expense on the variable rate debt and variable rate receivables was calculated using a constant principal balance and the December 31, 2009 market rates of 3.03% and 6.23%, respectively. The increase or decrease in market interest rate is based on the variable LIBOR portion of the interest rate which is 0.23% as of December 31, 2009.

(2)

Fair values as of December 31, 2008 represent fair values of obligations or receivables that were outstanding as of that date, and do not reflect the effect of any subsequent changes in principal balances and/or additions or extinguishments of instruments. Mortgage notes payable for 2008 include four mortgage notes classified as held for sale with an aggregate fair value at December 31, 2008 of approximately $28.7 million.

     Off-Balance Sheet Arrangements

          The Company has no off-balance sheet arrangements that are reasonably likely to have a current or future material effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Application of Critical Accounting Policies to Accounting Estimates

          The Company’s Consolidated Financial Statements are prepared in accordance with GAAP and the rules and regulations of the Securities and Exchange Commission. In preparing the Consolidated Financial Statements, management is required to exercise judgment and make assumptions that impact the carrying amount of assets and liabilities and the reported amounts of revenues and expenses reflected in the Consolidated Financial Statements.

          Management routinely evaluates the estimates and assumptions used in the preparation of its Consolidated Financial Statements. These regular evaluations consider historical experience and other reasonable factors and use the seasoned judgment of management personnel. Management has reviewed the Company’s critical accounting policies with the Audit Committee of the Board of Directors.

          Management believes the following paragraphs in this section describe the application of critical accounting policies by management to arrive at the critical accounting estimates reflected in the Consolidated Financial Statements. The Company’s accounting policies are more fully discussed in Note 1 to the Consolidated Financial Statements.

39

     Valuation of Long-Lived and Intangible Assets and Goodwill

          The Company assesses the potential for impairment of identifiable intangible assets and long-lived assets, including real estate properties, whenever events occur or a change in circumstances indicates that the recorded value might not be fully recoverable. Important factors that could cause management to review for impairment include significant underperformance of an asset relative to historical or expected operating results; significant changes in the Company’s use of assets or the strategy for its overall business; plans to sell an asset before its depreciable life has ended; or significant negative economic trends or negative industry trends for the Company or its operators. In addition, the Company reviews for possible impairment those assets subject to purchase options and those impacted by casualties, such as hurricanes. If management determines that the carrying value of the Company’s assets may not be fully recoverable based on the existence of any of the factors above, or others, management would measure and record an impairment charge based on the estimated fair value of the property. The Company recorded impairments of $0.02 million, $2.5 million, and $7.1 million, respectively, for the years ended December 31, 2009, 2008 and 2007 related to real estate properties and other long-lived assets. The impairment charge in 2009 was recorded in connection with the sale of a property in Washington. The impairment charges in 2008 included $1.6 million related to a long-lived asset, $0.1 million related to two properties sold in 2008, and $0.8 million related to two properties classified as held for sale in 2008, reducing the Company’s carrying values on the properties to the estimated fair values of the properties less costs to sell. The impairment charges in 2007 included $4.1 million recorded in connection with the sale of a property in Texas and $3.0 million related to six properties classified as held for sale as of December 31, 2007, reducing the Company’s carrying values on the properties to the estimated fair values of the properties less costs to sell.

          The Company also performs an annual goodwill impairment review. The Company’s reviews are performed as of December 31 of each year. The Company’s 2009 and 2008 reviews indicated that no impairment had occurred with the respect to the Company’s $3.5 million goodwill asset.

     Capitalization of Costs

          GAAP generally allows for the capitalization of various types of costs. The rules and regulations on capitalizing costs and the subsequent depreciation or amortization of those costs versus expensing them in the period incurred vary depending on the type of costs and the reason for capitalizing the costs.

          Direct costs of a development project generally include construction costs, professional services such as architectural and legal costs, travel expenses, land acquisition costs as well as other types of fees and expenses. These costs are capitalized as part of the basis of an asset to which such costs relate. Indirect costs include capitalized interest and overhead costs. The Company’s overhead costs are based on overhead load factors that are charged to a project based on direct time incurred. The Company computes the overhead load factors annually for its acquisition and development departments, which have employees who are involved in the projects. The overhead load factors are computed to absorb that portion of indirect employee costs (payroll and benefits, training, occupancy and similar costs) that are attributable to the productive time the employee incurs working directly on projects. The employees in the Company’s acquisitions and development departments who work on these projects maintain and report their hours daily, by project. Employee costs that are administrative, such as vacation time, sick time, or general and administrative time, are expensed in the period incurred.

          Acquisition-related costs of an existing building include finder’s fees, advisory, legal, accounting, valuation, other professional or consulting fees, and certain general and administrative costs. These costs are also expensed in the period incurred.

          Management’s judgment is also exercised in determining whether costs that have been previously capitalized to a project should be reserved for or written off if or when the project is abandoned or circumstances otherwise change that would call the project’s viability into question. The Company follows a standard and consistently applied policy of classifying pursuit activity as well as reserving for these types of costs based on their classification.

          The Company classifies its pursuit projects into four categories, of which three relate to development and one relates to acquisitions. The first category includes pursuits of developments that have a remote chance of producing new business. Costs for these projects are expensed in the period incurred. The second category includes pursuits of developments that might reasonably be expected to produce new business opportunities although there can be no assurance that they will result in a new project or contract. Costs for these projects are capitalized but, due to the uncertainty of projects in this category, these costs are reserved at 50%, which means that 50% of the costs are expensed in the period incurred. The third category includes those pursuits of developments that are either highly probable to result in a project or contract or already have resulted in a project or contract in which the contract requires the operator to reimburse the Company’s costs. Many times, these are pursuits involving operators with which the Company is already doing business. Since the Company believes it is probable that these pursuits will result in a project or contract, it capitalizes these costs in full and records no reserve. The fourth category includes pursuits that involve the acquisition of existing buildings. As discussed above, costs related to acquisitions of existing buildings are expensed in the period incurred.

40

          Each quarter, all capitalized pursuit costs are again reviewed carefully for viability or a change in classification, and a management decision is made as to whether any additional reserve is deemed necessary. If necessary and considered appropriate, management would record an additional reserve at that time. Capitalized pursuit costs, net of the reserve, are carried in other assets in the Company’s Consolidated Balance Sheets, and any reserve recorded is charged to general and administrative expenses on the Consolidated Statements of Income. All pursuit costs will ultimately be written off to expense or capitalized as part of the constructed real estate asset.

          As of December 31, 2009 and 2008, the Company had capitalized pursuit costs totaling $2.2 million and $2.5 million, respectively, and had provided reserves against its capitalized pursuit costs of $2.1 million and $0.6 million, respectively.

     Depreciation of Real Estate Assets and Amortization of Related Intangible Assets

          As of December 31, 2009, the Company had investments of approximately $2.3 billion in depreciable real estate assets and related intangible assets. When real estate assets and related intangible assets are acquired or placed in service, they must be depreciated or amortized. Management’s judgment involves determining which depreciation method to use, estimating the economic life of the building and improvement components of real estate assets, and estimating the value of intangible assets acquired when real estate assets are purchased that have in-place leases.

          As described in more detail in Note 1 to the Consolidated Financial Statements, when the Company acquires real estate properties with in-place leases, the cost of the acquisition must be allocated between the acquired tangible real estate assets “as if vacant” and any acquired intangible assets. Such intangible assets could include above- (or below-) market in-place leases and at-market in-place leases, which could include the opportunity costs associated with absorption period rentals, direct costs associated with obtaining new leases such as tenant improvements, and customer relationship assets. Any remaining excess purchase price is then allocated to goodwill. The identifiable tangible and intangible assets are then subject to depreciation and amortization. Goodwill is evaluated for impairment on an annual basis unless circumstances suggest that a more frequent evaluation is warranted.

          If assumptions used to estimate the “as if vacant” value of the building or the intangible asset values prove to be inaccurate, the pro-ration of the purchase price between building and intangibles and resulting depreciation and amortization could be incorrect. The amortization period for the intangible assets is the average remaining term of the actual in-place leases as of the acquisition date. To help prevent errors in its estimates from occurring, management applies consistent assumptions with regard to the elements of estimating the “as if vacant” values of the building and the intangible assets, including the absorption period, occupancy increases during the absorption period, and tenant improvement amounts. The Company uses the same absorption period and occupancy assumptions for similar building types, adding the future cash flows expected to occur over the next 10 years as a fully occupied building. The net present value of these future cash flows, discounted using a market rate of return, becomes the estimated “as if vacant” value of the building.

          With respect to the building components, there are several depreciation methods available under GAAP. Some methods record relatively more depreciation expense on an asset in the early years of the asset’s economic life, and relatively less depreciation expense on the asset in the later years of its economic life. The straight-line method of depreciating real estate assets is the method the Company follows because, in the opinion of management, it is the method that most accurately and consistently allocates the cost of the asset over its estimated life. The Company assigns a useful life to its owned buildings based on many factors, including the age of the property when acquired.

     Allowance for Doubtful Accounts and Credit Losses

          Many of the Company’s investments are subject to long-term leases or other financial support arrangements with hospital systems and healthcare providers affiliated with the properties. Due to the nature of the Company’s agreements, the Company’s accounts receivable, notes receivable and interest receivables result mainly from monthly billings of contractual tenant rents, lease guaranty amounts, principal and interest payments due on notes and mortgage notes receivable, late fees and additional rent.

     Accounts Receivable

          Payments on the Company’s accounts receivable are normally collected within 30 days of billing. When receivables remain uncollected, management must decide whether it believes the receivable is collectible and whether to provide an allowance for all or a portion of these receivables. Unlike a financial institution with a large volume of homogeneous retail receivables such as credit card loans or automobile loans that have a predictable loss pattern over time, the Company’s receivable losses have historically been infrequent and are tied to a unique or specific event. The Company’s allowance for doubtful accounts is generally based on specific identification and is recorded for a specific receivable amount once determined that such an allowance is needed.

41

          Management monitors the age and collectibility of receivables on an ongoing basis. At least monthly, a report is produced whereby all receivables are “aged” or placed into groups based on the number of days that have elapsed since the receivable was billed. Management reviews the aging report for evidence of deterioration in the timeliness of payments from tenants, sponsors or borrowers. Whenever deterioration is noted, management investigates and determines the reason(s) for the delay, which may include discussions with the delinquent tenant, sponsor or borrower. Considering all information gathered, management’s judgment must be exercised in determining whether a receivable is potentially uncollectible and, if so, how much or what percentage may be uncollectible. Among the factors management considers in determining uncollectibility are the following:

• type of contractual arrangement under which the receivable was recorded, e.g., a mortgage note, a triple net lease, a gross lease, a sponsor guaranty agreement or some other type of agreement;

• tenant’s or debtor’s reason for slow payment;

• industry influences and healthcare segment under which the tenant or debtor operates;

• evidence of willingness and ability of the tenant or debtor to pay the receivable;

• credit-worthiness of the tenant or debtor;

• collateral, security deposit, letters of credit or other monies held as security;

• tenant’s or debtor’s historical payment pattern;

• other contractual agreements between the tenant or debtor and the Company;

• relationship between the tenant or debtor and the Company;

• state in which the tenant or debtor operates; and

• existence of a guarantor and the willingness and ability of the guarantor to pay the receivable.

       Considering these factors and others, management must conclude whether all or some of the aged receivable balance is likely uncollectible. If management determines that some portion of a receivable is likely uncollectible, the Company records a provision for bad debt expense for the amount expected to be uncollectible. There is a risk that management’s estimate is over- or under-stated; however, management believes that this risk is mitigated by the fact that it re-evaluates the allowance at least once each quarter and bases its estimates on the most current information available. As such, any over- or under-stated estimates in the allowance should be adjusted for as soon as new and better information becomes available.

          Mortgage Notes and Notes Receivable

          The Company also evaluates collectibility of its mortgage notes and notes receivable. A loan is impaired when it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan as scheduled, including both contractual interest and principal payments. The Company did not record any provisions for doubtful accounts on its mortgage notes or notes receivable during 2009 or 2008. However, in connection with the sale of the senior living assets in 2007, the Company forgave approximately $2.6 million in notes receivable which was reflected in the gain on sale in 2007.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

          See “Market Risk” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” incorporated herein by reference to Item 7 of this Annual Report on Form 10-K.

42

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Healthcare Realty Trust Incorporated
Nashville, Tennessee

     We have audited the accompanying consolidated balance sheets of Healthcare Realty Trust Incorporated as of December 31, 2009 and 2008 and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2009. In connection with our audits of the financial statements, we have also audited the financial statement schedules listed in the accompanying index. These financial statements and schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and schedules. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Healthcare Realty Trust Incorporated at December 31, 2009 and 2008, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

     Also, in our opinion, the financial statement schedules, when considered in relation to the basic consolidated financial statements as a whole, present fairly, in all material respects, the information set forth therein.

     As discussed in Note 1 to the Consolidated Financial Statements, effective January 1, 2009, the Company adopted Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements (which was later codified in ASC No. 810-10-45).

     We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Healthcare Realty Trust Incorporated’s internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated February 22, 2010 expressed an unqualified opinion thereon.

/s/ BDO Seidman, LLP  

Nashville, Tennessee
February 22, 2010

43

Consolidated

BALANCE SHEETS

	December 31,
(Dollars in thousands, except per share amounts)	2009			2008
ASSETS
Real estate properties:
Land	$	135,495		$	107,555
Buildings, improvements and lease intangibles		1,977,264			1,792,402
Personal property		17,509			16,985
Construction in progress		95,059			84,782
		2,225,327			2,001,724
Less accumulated depreciation		(433,634	)		(367,360	)
Total real estate properties, net		1,791,693			1,634,364
Cash and cash equivalents		5,851			4,138
Mortgage notes receivable		31,008			59,001
Assets held for sale and discontinued operations, net		17,745			90,233
Other assets, net		89,467			77,044
Total assets	$	1,935,764		$	1,864,780
LIABILITIES AND EQUITY
Liabilities:
Notes and bonds payable	$	1,046,422		$	940,186
Accounts payable and accrued liabilities		55,043			45,937
Liabilities held for sale and discontinued operations		251			32,821
Other liabilities		43,900			49,589
Total liabilities		1,145,616			1,068,533
Commitments and contingencies
Equity:
Preferred stock, $.01 par value; 50,000,000 shares authorized; none issued and outstanding		—			—
Common stock, $.01 par value; 150,000,000 shares authorized; 60,614,931 and 59,264,284 shares issued and outstanding at December 31, 2009 and December 31, 2008, respectively		606			592
Additional paid-in capital		1,520,893			1,490,535
Accumulated other comprehensive loss		(4,593	)		(6,461	)
Cumulative net income attributable to common stockholders		787,965			736,874
Cumulative dividends		(1,518,105	)		(1,426,720	)
Total stockholders’ equity		786,766			794,820
Noncontrolling interests		3,382			1,427
Total equity		790,148			796,247
Total liabilities and equity	$	1,935,764		$	1,864,780

See accompanying notes.

44

Consolidated

STATEMENTS OF INCOME

	Year Ended December 31,
(Dollars in thousands, except per share data)	2009			2008			2007
REVENUES
Master lease rent	$	57,648		$	58,073		$	56,086
Property operating		180,024			136,745			121,644
Straight-line rent		2,027			651			959
Mortgage interest		2,646			2,207			1,752
Other operating		10,959			16,255			16,640
		253,304			213,931			197,081
EXPENSES
General and administrative		22,493			23,514			20,619
Property operating		95,141			82,223			71,680
Impairment		—			1,600			—
Bad debts, net of recoveries		537			1,833			222
Depreciation		62,447			48,129			42,141
Amortization		5,259			2,849			4,528
		185,877			160,148			139,190
OTHER INCOME (EXPENSE)
Gain on extinguishment of debt, net		—			4,102			—
Re-measurement gain of equity interest upon acquisition		2,701			—			—
Interest expense		(43,080	)		(42,126	)		(48,307	)
Interest and other income, net		1,173			2,439			1,459
		(39,206	)		(35,585	)		(46,848	)
INCOME FROM CONTINUING OPERATIONS		28,221			18,198			11,043
DISCONTINUED OPERATIONS
Income from discontinued operations		2,813			14,605			15,721
Impairments		(22	)		(886	)		(7,089	)
Gain on sales of real estate properties		20,136			9,843			40,405
INCOME FROM DISCONTINUED OPERATIONS		22,927			23,562			49,037
NET INCOME		51,148			41,760			60,080
Less: Net income attributable to noncontrolling interests		(57	)		(68	)		(18	)
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	51,091		$	41,692		$	60,062
BASIC EARNINGS PER COMMON SHARE:
Income from continuing operations	$	0.48		$	0.35		$	0.23
Discontinued operations		0.40			0.46			1.03
Net income attributable to common stockholders	$	0.88		$	0.81		$	1.26
DILUTED EARNINGS PER COMMON SHARE:
Income from continuing operations	$	0.48		$	0.35		$	0.23
Discontinued operations		0.39			0.44			1.01
Net income attributable to common stockholders	$	0.87		$	0.79		$	1.24
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING — BASIC		58,199,592			51,547,279			47,536,133
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING — DILUTED		59,047,314			52,564,944			48,291,330

See accompanying notes.

45

Consolidated
STATEMENTS OF STOCKHOLDERS’ EQUITY

								Accumulated
					Additional			Other			Cumulative					Total			Non-
	Preferred		Common		Paid-In			Comprehensive			Net		Cumulative			Stockholders’			controlling			Total
(Dollars in thousands, except per share data)	Stock		Stock		Capital			Loss			Income		Dividends			Equity			Interests			Equity
Balance at December 31, 2006	$	—	$	478	$	1,211,234		$	(4,035	)	$	635,120	$	(1,017,125	)	$	825,672		$	—		$	825,672
Issuance of stock, net of costs		—		29		70,545			—			—		—			70,574			—			70,574
Common stock redemption		—		—		(386	)		—			—		—			(386	)		—			(386	)
Stock-based compensation		—		—		4,678			—			—		—			4,678			—			4,678
Net income		—		—		—			—			60,062		—			60,062			18			60,080
Other comprehensive loss		—		—		—			(311	)		—		—			(311	)		—			(311	)
Comprehensive income		—																					59,769
Special dividend to common stockholders ($4.75 per share)		—		—		—			—			—		(227,157	)		(227,157	)		—			(227,157	)
Dividends to common stockholders ($2.09 per share)		—		—		—			—			—		(101,137	)		(101,137	)		—			(101,137	)
Distributions to noncontrolling interests		—		—		—			—			—		—			—			(18	)		(18	)
Balance at December 31, 2007		—		507		1,286,071			(4,346	)		695,182		(1,345,419	)		631,995			—			631,995
Issuance of stock, net of costs		—		83		201,966			—			—		—			202,049			—			202,049
Common stock redemption		—		—		(282	)		—			—		—			(282	)		—			(282	)
Stock-based compensation		—		2		2,780			—			—		—			2,782			—			2,782
Net income		—		—		—			—			41,692		—			41,692			68			41,760
Other comprehensive loss		—		—		—			(2,115	)		—					(2,115	)		—			(2,115	)
Comprehensive income		—																					39,645
Dividends to common stockholders ($1.54 per share)		—		—		—			—			—		(81,301	)		(81,301	)		—			(81,301	)
Distributions to noncontrolling interests		—		—		—			—			—		—			—			(110	)		(110	)
Proceeds from noncontrolling interests		—		—		—			—			—		—			—			1,469			1,469
Balance at December 31, 2008		—		592		1,490,535			(6,461	)		736,874		(1,426,720	)		794,820			1,427			796,247
Issuance of stock, net of costs		—		13		26,655			—			—		—			26,668			—			26,668
Common stock redemption		—		—		(8	)		—			—		—			(8	)		—			(8	)
Stock-based compensation		—		1		3,711			—			—		—			3,712			—			3,712
Net income		—		—		—			—			51,091		—			51,091			57			51,148
Other comprehensive loss		—		—		—			1,868			—		—			1,868			—			1,868
Comprehensive income		—																					53,016
Dividends to common stockholders ($1.54 per share)		—		—		—			—			—		(91,385	)		(91,385	)		—			(91,385	)
Distributions to noncontrolling interests		—		—		—			—			—		—			—			(330	)		(330	)
Proceeds from noncontrolling interests		—		—		—			—			—		—			—			2,228			2,228
Balance at December 31, 2009	$	—	$	606	$	1,520,893		$	(4,593	)	$	787,965	$	(1,518,105	)	$	786,766		$	3,382		$	790,148

See accompanying notes.

46

Consolidated
STATEMENTS OF CASH FLOWS

	Year Ended December 31,
(Dollars in thousands)	2009			2008			2007
OPERATING ACTIVITIES
Net income	$	51,148		$	41,760		$	60,080
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		70,921			54,748			53,924
Stock-based compensation		3,711			2,780			4,678
Straight-line rent receivable		(1,925	)		(643	)		(1,043	)
Straight-line rent liability		444			423			954
Gain on sales of real estate properties		(20,136	)		(9,843	)		(40,405	)
Gain on sales of land		—			(384	)		—
Gain on extinguishment of debt		—			(4,102	)		—
Re-measurement gain of equity interest upon acquisition		(2,701	)		—			—
Impairments		22			2,486			7,089
Equity in (income) losses from unconsolidated joint ventures		2			(1,021	)		309
Provision for bad debts, net of recoveries		517			1,904			198
State income taxes paid, net of refunds		(674	)		(612	)		(137	)
Payment of partial pension settlement		(2,300	)		—			—
Changes in operating assets and liabilities:
Other assets		(1,017	)		6,794			(94	)
Accounts payable and accrued liabilities		5,127			3,097			(2,065	)
Other liabilities		75			7,864			7,450
Net cash provided by operating activities		103,214			105,251			90,938
INVESTING ACTIVITIES
Acquisition and development of real estate properties		(170,520	)		(383,702	)		(130,799	)
Funding of mortgages and notes receivable		(23,391	)		(36,970	)		(14,759	)
Investments in unconsolidated joint venture		(184	)		—			—
Distributions from unconsolidated joint ventures		—			882			1,414
Partial redemption of preferred equity investment in an unconsolidated joint venture		—			5,546			—
Proceeds from sales of real estate		83,441			37,133			311,927
Proceeds from mortgages and notes receivable repayments		12,893			8,236			65,572
Net cash provided by (used in) investing activities		(97,761	)		(368,875	)		233,355
FINANCING ACTIVITIES
Net borrowings (repayments) on unsecured credit facilities		(279,000	)		193,000			(54,000	)
Borrowings on notes and bonds payable		377,969			—			1,840
Repayments on notes and bonds payable		(28,433	)		(3,813	)		(7,440	)
Repurchase of notes payable		—			(45,460	)		—
Special dividend paid		—			—			(227,157	)
Quarterly dividends paid		(91,385	)		(81,301	)		(101,137	)
Proceeds from issuance of common stock		26,467			197,255			70,780
Common stock redemptions		(8	)		(282	)		(386	)
Capital contributions received from noncontrolling interests		2,228			1,469			—
Distributions to noncontrolling interest holders		(282	)		(110	)		(18	)
Credit facility amendment and extension fees		—			(1,126	)		—
Equity issuance costs		(3	)		(389	)		(206	)
Debt issuance costs		(11,293	)		—			—
Net cash provided by (used in) financing activities		(3,740	)		259,243			(317,724	)
Increase (decrease) in cash and cash equivalents		1,713			(4,381	)		6,569
Cash and cash equivalents, beginning of year		4,138			8,519			1,950
Cash and cash equivalents, end of year	$	5,851		$	4,138		$	8,519
Supplemental Cash Flow Information:
Interest paid	$	50,052		$	49,997		$	53,233
Capitalized interest	$	10,087		$	6,679		$	4,022
Capital expenditures included in accounts payable and accrued liabilities	$	16,266		$	12,500		$	6,699
Mortgage notes payable assumed upon acquisition of a joint venture interest (adjusted to fair value)	$	11,716		$	50,825		$	—
Mortgage note payable disposed of upon sale of joint venture interest	$	5,425		$	—		$	—
Forgiveness of notes receivable upon sale of certain senior living assets	$	—		$	—		$	2,640

See accompanying notes.

47

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

     Business Overview

          Healthcare Realty Trust Incorporated is a real estate investment trust that owns, acquires, manages, finances, and develops income-producing real estate properties associated primarily with the delivery of outpatient healthcare services throughout the United States. As of December 31, 2009, excluding assets classified as held for sale and including an investment in one unconsolidated joint venture, the Company had investments of approximately $2.3 billion in 204 real estate properties and mortgages. The Company’s 199 owned real estate properties, excluding assets classified as held for sale, are located in 28 states, totaling approximately 12.3 million square feet. In addition, the Company provided property management services to approximately 9.3 million square feet nationwide. Square footage disclosures in this Annual Report on Form 10-K are unaudited.

     Principles of Consolidation

          The Consolidated Financial Statements include the accounts of the Company, its wholly-owned subsidiaries, joint ventures and partnerships where the Company controls the operating activities. The Company’s Consolidated Statement of Income for 2007 also includes the results of operations of six VIEs of which the Company had concluded it was the primary beneficiary. The real estate properties associated with these VIEs were sold in 2007.

          The Company’s investments in its unconsolidated joint ventures are included in other assets and the related equity income is recognized in other income (expense) on the Company’s Consolidated Financial Statements. The Company also consolidates one joint venture in which it has an 80% controlling interest. Included in the Company’s Consolidated Financial Statements related to this consolidated joint venture was approximately $91.4 million in real estate investments, including mortgage notes receivable, at December 31, 2009. The Company reports noncontrolling (minority) interests in subsidiaries as equity and the related net income attributable to the noncontrolling interests as part of consolidated net income in its financial statements.

          All significant intercompany accounts, transactions and balances have been eliminated in the Consolidated Financial Statements. The Company evaluated subsequent events for recognition or disclosure through February 22, 2010, which is the date the Consolidated Financial Statements were issued.

     Use of Estimates in the Consolidated Financial Statements

          Preparation of the Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ from those estimates.

     Segment Reporting

          The Company owns, acquires, manages, finances and develops outpatient healthcare-related properties. The Company is managed as one reporting unit, rather than multiple reporting units, for internal reporting purposes and for internal decision-making. Therefore, the Company discloses its operating results in a single segment.

     Reclassifications

          Certain reclassifications have been made in the Consolidated Financial Statements for the years ended December 31, 2008 and 2007 to conform to the 2009 presentation.

          Discontinued Operations

          Certain amounts in the Company’s Consolidated Financial Statements for prior periods have been reclassified to conform to the current period presentation. Assets sold or held for sale, and related liabilities, have been reclassified on the Company’s Consolidated Balance Sheets, and the operating results of those assets have been reclassified from continuing to discontinued operations for all periods presented.

48

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

          Noncontrolling interests

          Upon adoption of Statement of Financial Accounting Standard (“SFAS”) No. 160, “Noncontrolling Interests in Consolidated Financial Statements,” on January 1, 2009, codified in Accounting Standards Codification (“ASC”) No. 805, all prior period noncontrolling interests on the Company’s Consolidated Balance Sheets have been reclassified from liabilities to equity, and all prior period noncontrolling interests’ net income on the Company’s Consolidated Statements of Income have been reclassified to specifically identify net income or loss attributable to the noncontrolling interests. The components of noncontrolling interests for prior years have also been reclassified on the Company’s Consolidated Statements of Cash Flows.

     Real Estate Properties

          Real estate properties are recorded at fair value at the acquisition date. The fair value of real estate properties acquired is allocated between land, buildings, tenant improvements, lease and other intangibles, and personal property based upon estimated fair values at the time of acquisition. The Company’s gross real estate assets, on a book-basis, including at-market in-place lease intangibles and assets held for sale, totaled approximately $2.3 billion and $2.1 billion, respectively, as of December 31, 2009 and 2008.

          Depreciation and amortization of real estate assets and liabilities in place as of December 31, 2009, is provided for on a straight-line basis over the asset’s estimated useful life:

Land improvements	9.5 to 15 years
Buildings and improvements	3.0 to 39 years
Lease intangibles (including ground lease intangibles)	1.3 to 93 years
Personal property	3 to 15 years

     Land Held for Development

          Included in construction in progress on the Company’s Consolidated Balance Sheets are two parcels of land held for future development. As of December 31, 2009 and 2008, the Company’s investment in land held for development totaled approximately $17.3 million.

     Accounting for Acquisitions of Real Estate Properties with In-Place Leases

          When a building is acquired with in-place leases, the cost of the acquisition must be allocated between the tangible real estate assets and the intangible real estate assets related to in-place leases based on their fair values. Where appropriate, the intangible assets recorded could include goodwill or customer relationship assets. The values related to above- or below-market in-place lease intangibles are amortized to rental income where the Company is the lessor, are amortized to property operating expense where the Company is the lessee, and are amortized over the average remaining term of the leases upon acquisition. The values of at-market in-place leases and other intangible assets, such as customer relationship assets, are amortized and reflected in amortization expense in the Company’s Consolidated Statements of Income.

          The Company’s approach to estimating the value of in-place leases is a multi-step process.

• First, the Company considers whether any of the in-place lease rental rates are above- or below-market. An asset (if the actual rental rate is above-market) or a liability (if the actual rental rate is below-market) is calculated and recorded in an amount equal to the present value of the future cash flows that represent the difference between the actual lease rate and the average market rate.

• Second, the Company estimates an absorption period assuming the building is vacant and must be leased up to the actual level of occupancy when acquired. During that absorption period the owner would incur direct costs, such as tenant improvements, and would suffer lost rental income. Likewise, the owner would have acquired a measurable asset in that, assuming the building was vacant, certain fixed costs would be avoided because the actual in-place lessees would reimburse a certain portion of fixed costs through expense reimbursements during the absorption period. All of these assets (tenant improvement costs avoided, rental income lost, and fixed costs recovered through in-place lessee reimbursements) are estimated and recorded in amounts equal to the present value of future cash flows.

• Third, the Company estimates the value of the building “as if vacant.” The Company uses the same absorption period and occupancy assumptions used in step two, adding to those the future cash flows expected in a fully occupied building. The net present value of these future cash flows, discounted at a market rate of return, becomes the estimated “as if vacant” value of the building.

49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

• Fourth, the actual purchase price is allocated based on the various asset fair values described above. The building and tenant improvement components of the purchase price are depreciated over the useful life of the building or the average remaining term of the in-places leases. The above- or below-market rental rate assets or liabilities are amortized to rental income or property operating expense over the remaining term of the leases. The at-market, in-place leases are amortized to amortization expense over the average remaining term of the leases, customer relationship assets are amortized to amortization expense over terms applicable to each acquisition, and any goodwill recorded would be reviewed for impairment at least annually.

          See Note 8 for more details on the Company’s intangible assets as of December 31, 2009 and 2008.

     Fair Value Measurements

          Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. In calculating fair value, a company must maximize the use of observable market inputs, minimize the use of unobservable market inputs and disclose in the form of an outlined hierarchy the details of such fair value measurements.

          A hierarchy of valuation techniques is defined to determine whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These inputs have created the following fair value hierarchy:

• Level 1 — quoted prices for identical instruments in active markets;

• Level 2 — quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3 — fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

          In connection with its acquisition of real estate assets during 2009, the Company assumed mortgage notes payable. The valuation of the mortgage notes payable was determined using level two inputs.

     Cash and Cash Equivalents

          Cash and cash equivalents includes short-term investments with original maturities of three months or less when purchased.

     Allowance for Doubtful Accounts and Credit Losses

          Accounts Receivable

          Management monitors the aging and collectibility of its accounts receivable balances on an ongoing basis. At least monthly, a report is produced whereby all receivables are “aged” or placed into groups based on the number of days that have elapsed since the receivable was billed. Management reviews the aging report for evidence of deterioration in the timeliness of payment from a tenant or sponsor. Whenever deterioration is noted, management investigates and determines the reason(s) for the delay, which may include discussions with the delinquent tenant or sponsor. Considering all information gathered, management’s judgment is exercised in determining whether a receivable is potentially uncollectible and, if so, how much or what percentage may be uncollectible. Among the factors management considers in determining collectibility are the type of contractual arrangement under which the receivable was recorded, e.g., a triple net lease, a gross lease, a sponsor guaranty agreement, or some other type of agreement; the tenant’s reason for slow payment; industry influences under which the tenant operates; evidence of willingness and ability of the tenant to pay the receivable; credit-worthiness of the tenant; collateral, security deposit, letters of credit or other monies held as security; tenant’s historical payment pattern; other contractual agreements between the tenant and the Company; relationship between the tenant and the Company; the state in which the tenant operates; and the existence of a guarantor and the willingness and ability of the guarantor to pay the receivable.

          Considering these factors and others, management concludes whether all or some of the aged receivable balance is likely uncollectible. Upon determining that some portion of the receivable is likely uncollectible, the Company records a provision for bad

50

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

debts for the amount it expects will be uncollectible. When efforts to collect a receivable are exhausted, the receivable amount is charged off against the allowance. The Company does not hold any accounts receivable for sale.

          Mortgage Notes and Notes Receivable

          The Company also evaluates collectibility of its mortgage notes and notes receivable and records allowances on the notes as necessary. A loan is impaired when it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan as scheduled, including both contractual interest and principal payments. If a mortgage loan or note receivable becomes past due, the Company will review the specific circumstances and may discontinue the accrual of interest on the loan. The loan is not returned to accrual status until the debtor has demonstrated the ability to continue debt service in accordance with the contractual terms. As of December 31, 2009 and 2008, there were no recorded investments in mortgage notes or notes receivable that were either on non-accrual status or were past due more than ninety days and continued to accrue interest.

          The Company’s notes receivable balances were approximately $3.3 million and $0.5 million, respectively, as of December 31, 2009 and 2008. Interest rates on the notes are fixed and ranged from 8.0% to 11.6% with maturity dates ranging from 2011 through 2016 as of December 31, 2009. The Company did not record allowances or reserves related to its mortgage notes or notes receivable during 2009 or 2008.

          The Company had four mortgage notes receivable outstanding as of December 31, 2009 and 2008 with aggregate balances totaling $31.0 million and $59.0 million, respectively. The weighted average maturities of the notes were approximately 4.7 years and 2.7 years, respectively, with interest rates ranging from 6.2% to 8.5% and 1.5% to 8.5%, respectively, as of December 31, 2009 and 2008.

          As of December 31, 2009, the Company did not hold any of its mortgage notes or notes receivable available for sale. Also, management believes that its mortgage notes and notes receivable outstanding as of December 31, 2009 and 2008 are collectible.

     Goodwill and Other Intangible Assets

          Goodwill and intangible assets with indefinite lives are not amortized, but are tested at least annually for impairment. Intangible assets with finite lives are amortized over their respective lives to their estimated residual values and are reviewed for impairment only when impairment indicators are present.

          Identifiable intangible assets of the Company are comprised of enterprise goodwill, in-place lease intangible assets, customer relationship intangible assets, and deferred financing costs. In-place lease and customer relationship intangible assets are amortized on a straight-line basis over the applicable lives of the assets. Deferred financing costs are amortized over the term of the related credit facility under the straight-line method, which approximates amortization under the effective interest method. Goodwill is not amortized but is evaluated annually on December 31 for impairment. The 2009 and 2008 impairment evaluations each indicated that no impairment had occurred with respect to the $3.5 million goodwill asset. See Note 8 for more detail on the Company’s intangible assets.

     Contingent Liabilities

          From time to time, the Company may be subject to loss contingencies arising from legal proceedings, which are discussed in Note 14. Additionally, while the Company maintains comprehensive liability and property insurance with respect to each of its properties, the Company may be exposed to unforeseen losses related to uninsured or underinsured damages.

          The Company continually monitors any matters that may present a contingent liability, and, on a quarterly basis, management reviews the Company’s reserves and accruals in relation to each of them, adjusting provisions as necessary in view of changes in available information. Contingent liabilities are recorded when a loss is determined to be both probable and can be reasonably estimated. Changes in estimates regarding the exposure to a contingent loss are reflected as adjustments to the related liability in the periods when they occur.

          Because of uncertainties inherent in the estimation of contingent liabilities, it is possible that management’s provision for contingent losses could change materially in the near term. To the extent that any losses, in addition to amounts recognized, are at least reasonably possible, such amounts will be disclosed in the notes to the Consolidated Financial Statements.

51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

     Accounting for Defined Benefit Pension Plans

          The Company has pension plans under which the Company’s Board of Directors and certain designated officers may receive retirement benefits upon retirement and the completion of five years of service with the Company. The plans are unfunded and benefits will be paid from earnings of the Company. The Company recognizes pension expense on an accrual basis over an estimated service period. The Company calculates pension expense and the corresponding liability annually on the measurement date (December 31) which requires certain assumptions, such as a discount rate and the recognition of actuarial gains and losses. In November 2009, the Company terminated the Outside Director Plan. As a result, lump sum payments totaling approximately $2.6 million will be paid in November 2010, or earlier upon retirement, to the eight outside directors who participated in the plan. See Note 11.

     Incentive Plans

          The Company has issued and outstanding various employee stock-based awards. These awards include stock issued to employees pursuant to the 2007 Employees Stock Incentive Plan and its predecessor plan (the “Incentive Plan”), the Optional Deferral Plan and the 2000 Employee Stock Purchase Plan (“Employee Stock Purchase Plan”). See Note 12 for details on the Company’s stock-based awards. The Employee Stock Purchase Plan features a “look-back” provision which enables the employee to purchase a fixed number of shares at the lesser of 85% of the market price on the date of grant or 85% of the market price on the date of exercise, with optional purchase dates occurring once each quarter for 27 months.

          The Company accounts for awards to its employees based on fair value, using the Black-Scholes model, and generally recognizes expense over the award’s vesting period, net of estimated forfeitures. Since the options granted under the Employee Stock Purchase Plan immediately vest, the Company records compensation expense for those options in the first quarter of each year, when granted. In each of the first quarters of 2009, 2008 and 2007, the Company recognized in general and administrative expenses approximately $0.3 million, $0.2 million and $0.2 million of compensation expense, respectively, related to each year’s grants of options to purchase shares under the Employee Stock Purchase Plan.

     Accumulated Other Comprehensive Loss

          Certain items must be included in comprehensive income (loss), including items such as foreign currency translation adjustments, minimum pension liability adjustments, and unrealized gains or losses on available-for-sale securities. The Company’s accumulated other comprehensive loss includes the cumulative pension liability adjustments, which are generally recognized in the fourth quarter of each year.

     Revenue Recognition

          The Company recognizes revenue when it is realized or realizable and earned. There are four criteria that must all be met before a Company may recognize revenue, including persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered (i.e., the tenant has taken possession of and controls the physical use of the leased asset), the price has been fixed or is determinable, and collectibility is reasonably assured.

          The Company derives most of its revenues from its real estate property and mortgage notes receivable portfolio. The Company’s rental and mortgage interest income is recognized based on contractual arrangements with its tenants, sponsors or borrowers. These contractual arrangements fall into three categories: leases, mortgage notes receivable, and property operating agreements as described in the following paragraphs. The Company may accrue late fees based on the contractual terms of a lease or note. Such fees, if accrued, are included in master lease income, property operating income, or mortgage interest income on the Company’s Consolidated Statements of Income, based on the type of contractual agreement.

          Income received but not yet earned is deferred until such time it is earned. Deferred revenue, included in other liabilities on the Consolidated Balance Sheets, was $18.8 million and $19.4 million, respectively, at December 31, 2009 and 2008.

     Rental Income

          Rental income related to non-cancelable operating leases is recognized as earned over the life of the lease agreements on a straight-line basis. Additional rent, generally defined in most lease agreements as the cumulative increase in a Consumer Price Index (“CPI”) from the lease start date to the CPI as of the end of the previous year, is calculated as of the beginning of each year, and is then billed and recognized as income during the year as provided for in the lease. Included in income from continuing operations, the Company recognized additional rental income, net of reserves, of approximately $2.5 million, $1.7 million and $1.7 million, respectively,

52

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

for the years ended December 31, 2009, 2008 and 2007. During the fourth quarter of 2008, the Company recorded a $1.4 million allowance related to additional rent due from an operator. Rental income from properties under a master lease arrangement with the tenant is included in master lease rental income and rental income from properties under various tenant lease arrangements, including operating expense recoveries, is included in property operating income on the Company’s Consolidated Statements of Income. Operating expense recoveries recognized in income from continuing operations for the years ended December 31, 2009, 2008 and 2007 were approximately $20.8 million, $10.3 million and $6.2 million, respectively.

     Mortgage Interest Income

          Interest income on the Company’s mortgage notes receivable is recognized based on the interest rates, maturity dates and amortization periods in accordance with each note agreement. Interest rates on three of its mortgage notes receivable outstanding as of December 31, 2009 were fixed and one was variable.

     Other Operating Income

          Other operating income on the Company’s Consolidated Statements of Income generally includes shortfall income recognized under its property operating agreements, interest income on notes receivable, replacement rent from an operator, management fee income, and prepayment penalty income.

          Property operating agreements, between the Company and sponsoring health systems, applicable to eight of the Company’s 199 owned real estate properties as of December 31, 2009, contractually obligate the sponsoring health system to provide to the Company, for a short term, a minimum return on the Company’s investment in the property in exchange for the right to be involved in the operating decisions of the property, including tenancy. If the minimum return is not achieved through normal operations of the property, the Company will calculate and accrue any shortfalls as income that the sponsor is responsible to pay to the Company under the terms of the property operating agreement.

          The Company provides property management services for both third-party and owned real estate properties. Management fees are generally calculated, accrued and billed monthly based on a percentage of cash collections of tenant receivables for the month.

          Other operating income for the years ended December 31, 2009, 2008 and 2007 is detailed in the table below:

	Year Ended December 31,
(Dollars in millions)	2009		2008		2007
Property lease guaranty revenue	$	8.2	$	12.8	$	13.2
Interest income on notes receivable		0.6		0.6		0.3
Management fee income		0.2		0.2		0.3
Replacement rent		1.3		2.5		2.5
Other		0.7		0.2		0.3
	$	11.0	$	16.3	$	16.6

     Federal Income Taxes

          No provision has been made for federal income taxes. The Company intends at all times to qualify as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code of 1986 (the “Code”), as amended. The Company must distribute at least 90% per annum of its real estate investment trust taxable income to its stockholders and meet other requirements to continue to qualify as a real estate investment trust. See Note 15 for further discussion.

          The Company classifies interest and penalties related to uncertain tax positions, if any, in the Consolidated Financial Statements as a component of general and administrative expense. No such amounts were recognized during the three years ended December 31, 2009.

          Federal tax returns for the years 2006, 2007 and 2008 are currently still subject to examination by taxing authorities.

     State Income Taxes

          The Company must pay certain state income taxes which are generally included in general and administrative expense on the Company’s Consolidated Statements of Income. See Note 15 for further discussion.

53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

     Sales and Use Taxes

          The Company must pay sales and use taxes to certain state tax authorities based on rents collected from tenants in properties located in those states. The Company is generally reimbursed for these taxes by the tenant. The Company accounts for the payments to the taxing authority and subsequent reimbursement from the tenant on a net basis in the Company’s Consolidated Statements of Income.

     Discontinued Operations

          The Company sells properties from time to time due to a variety of factors, such as market conditions or the exercise of purchase options by tenants. The operating results of properties that have been sold or are held for sale are reported as discontinued operations in the Company’s Consolidated Statements of Income. A company must report discontinued operations when a component of an entity has either been disposed of or is deemed to be held for sale if (i) both the operations and cash flows of the component have been or will be eliminated from ongoing operations as a result of the disposal transaction, and (ii) the entity will not have any significant continuing involvement in the operations of the component after the disposal transaction. Long-lived assets held for sale are reported at the lower of their carrying amount or their fair value less cost to sell. Further, depreciation of these assets ceases at the time the assets are classified as discontinued operations. Losses resulting from the sale of such properties are characterized as impairment losses relating to discontinued operations in the Consolidated Statements of Income.

          In the Company’s Consolidated Statements of Income for the years ended December 31, 2009, 2008 and 2007, income related to properties sold or to be sold as of December 31, 2009 was included in discontinued operations for each of the three years totaling approximately $22.9 million, $23.6 million, and $49.0 million, respectively.

          Assets held for sale at December 31, 2009 and 2008 included six and 12 properties, respectively.

     Earnings per Share

          Basic earnings per share is calculated using weighted average shares outstanding less issued and outstanding but unvested restricted shares of common stock. Diluted earnings per share is calculated using weighted average shares outstanding plus the dilutive effect of the outstanding stock options from the Employee Stock Purchase Plan and restricted shares of common stock, using the treasury stock method and the average stock price during the period. See Note 13 for the calculations of earnings per share.

     New Pronouncements

          Business Combinations and Noncontrolling Interests in Consolidated Financial Statements

          SFAS No. 141 (R), “Business Combinations” (“SFAS No. 141 (R)”) codified in ASC No. 805 and SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements,” (“SFAS No. 160”) codified in ASC No. 810 became effective for the Company on January 1, 2009. These standards were designed to improve, simplify and converge internationally the accounting for business combinations and the reporting of noncontrolling interests in consolidated financial statements. SFAS No. 141 (R) requires an acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquiring entity to disclose to investors and other users all of the information needed to evaluate and understand the nature and financial effect of the business combination. SFAS No. 160 requires all entities to report noncontrolling (minority) interests in subsidiaries as equity in the consolidated financial statements. SFAS No. 160 also eliminates the diversity that existed in accounting for transactions between an entity and noncontrolling interests by requiring they be treated as equity transactions. The adoption of SFAS No. 141 (R) and SFAS No. 160 did not have a material impact on the Company’s Consolidated Financial Statements, except that, upon adoption, the Company was required to retroactively restate its Consolidated Balance Sheets to reflect the reclassification of its noncontrolling interests from other liabilities to equity and restate its Consolidated Statements of Income to specifically identify net income or loss attributable to the noncontrolling interests.

          Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities

          Financial Accounting Standards Board’s (“FASB”) Staff Position (“FSP”) EITF Issue No. 03-6, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities,” (“FSP EITF 03-6-1”) codified in ASC No. 260 became effective for the Company on January 1, 2009. FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing

54

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

earnings per share under the two-class method. Under the guidance in FSP EITF 03-6-1, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. The adoption of FSP EITF 03-6-1 did not have a material impact on the Company’s calculation of earnings per share.

          The Codification

          Beginning with interim or annual periods ending after September 15, 2009, the FASB Accounting Standards Codification (“the Codification”) became the single source of authoritative nongovernmental GAAP. Previously existing accounting standard documents, such as FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other related literature, excluding guidance from the Securities and Exchange Commission (“SEC”), were superseded by the Codification. As such, all references to authoritative accounting literature are referenced in accordance with the Codification. The Codification was not designed to change GAAP, but instead to introduce a new structure that combines all authoritative standards into a comprehensive, topically organized online database. The Codification has not changed the content of the Company’s financial statements or other disclosures.

55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2. Real Estate and Mortgage Notes Receivable Investments

          The Company invests in healthcare-related properties and mortgages located throughout the United States. The Company provides management, leasing and development services, and capital for the construction of new facilities, as well as for the acquisition of existing properties. The Company had investments of approximately $2.3 billion in 204 real estate properties and mortgage notes receivable as of December 31, 2009, excluding assets classified as held for sale and including an investment in one unconsolidated joint venture. The following table summarizes the Company’s investments.

					Buildings,
					Improvements,
	Number of				Lease Intangibles		Personal				Accumulated
(Dollars in thousands)	Facilities (1)		Land		and CIP		Property		Total		Depreciation
Medical Office:
Arizona		8	$	3,320	$	66,295	$	54	$	69,669	$	(10,567	)
Florida		14		8,671		125,789		157		134,617		(44,806	)
Hawaii		3		—		91,581		5		91,586		(5,994	)
North Carolina		14		—		141,414		66		141,480		(6,308	)
Tennessee		15		6,782		160,497		157		167,436		(41,201	)
Texas		30		27,522		447,529		1,061		476,112		(77,178	)
Washington		5		2,200		67,822		1		70,023		(2,311	)
Other states		41		39,995		433,785		246		474,026		(77,703	)
		130		88,490		1,534,712		1,747		1,624,949		(266,068	)
Physician Clinics:
Florida		8		10,639		44,668		—		55,307		(14,794	)
Virginia		3		1,623		29,169		127		30,919		(10,060	)
Other states		20		5,812		82,000		264		88,076		(21,667	)
		31		18,074		155,837		391		174,302		(46,521	)
Ambulatory care/surgery:
California		2		4,898		33,530		23		38,451		(12,439	)
Texas		3		6,882		35,392		81		42,355		(14,490	)
Other states		5		5,897		13,941		—		19,838		(5,308	)
		10		17,677		82,863		104		100,644		(32,237	)
Specialty outpatient:
Arkansas		1		647		2,408		—		3,055		(979	)
Florida		1		911		2,500		—		3,411		(943	)
Other states		3		246		6,774		—		7,020		(1,844	)
		5		1,804		11,682		—		13,486		(3,766	)
Specialty inpatient:
Indiana		1		1,071		42,335		—		43,406		(3,799	)
Pennsylvania		6		1,214		112,653		—		113,867		(37,315	)
Other states		6		5,265		72,086		—		77,351		(19,894	)
		13		7,550		227,074		—		234,624		(61,008	)
Other:
Michigan		5		193		12,728		183		13,104		(6,395	)
Virginia		2		1,178		10,084		5		11,267		(3,479	)
Other states		3		529		20,042		448		21,019		(7,492	)
		10		1,900		42,854		636		45,390		(17,366	)
Land held for development		—		—		17,301		—		17,301		—
Corporate Property		—		—		—		14,631		14,631		(6,668	)
Total owned properties		199		135,495		2,072,323		17,509		2,225,327		(433,634	)
Mortgage notes receivable		4		—		—		—		31,008		—
Unconsolidated joint venture investment		1		—		—		—		1,266		—
Total real estate investments		204	$	135,495	$	2,072,323	$	17,509	$	2,257,601	$	(433,634	)

(1) Includes two properties under construction.

56

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3. Real Estate Property Leases

          The Company’s properties are generally leased pursuant to non-cancelable, fixed-term operating leases or are supported through other financial support arrangements with expiration dates through 2029. Some leases and financial arrangements provide for fixed rent renewal terms of five years, or multiples thereof, in addition to market rent renewal terms. Some leases provide the lessee, during the term of the lease and for a short period thereafter, with an option or a right of first refusal to purchase the leased property. The Company’s portfolio of master leases generally requires the lessee to pay minimum rent, additional rent based upon fixed percentage increases or increases in the Consumer Price Index and all taxes (including property tax), insurance, maintenance and other operating costs associated with the leased property.

          Future minimum lease payments under the non-cancelable operating leases and guaranteed amounts due to the Company under property operating agreements as of December 31, 2009 are as follows (in thousands):

2010	$	196,525
2011		172,414
2012		146,003
2013		119,808
2014		90,272
2015 and thereafter		289,742
	$	1,014,764

     Customer Concentrations

          The Company’s real estate portfolio is leased to a diverse tenant base. The Company did not have any customers that accounted for 10% or more of the Company’s revenues, including revenues from discontinued operations, for the year ended December 31, 2009 and had only one customer that accounted for 10% or more of the Company’s revenues for the years ended December 31, 2008 and 2007, HealthSouth at 11%.

     Purchase Option Provisions

          Certain of the Company’s leases include purchase option provisions. The provisions vary from lease to lease but generally allow the lessee to purchase the property covered by the lease at the greater of fair market value or an amount equal to the Company’s gross investment. As of December 31, 2009, the Company had a gross investment of approximately $111.1 million in real estate properties that were subject to outstanding, exercisable contractual options to purchase, with various conditions and terms, by the respective operators and lessees that had not been exercised.

4. Acquisitions and Dispositions and Mortgage Repayments

     2009 Real Estate Acquisitions

          During 2009, the Company acquired the following properties:

• the remaining 50% equity interest in a joint venture (Unico 2006 MOB), which owns a 62,246 square foot on-campus medical office building in Oregon, for approximately $4.4 million in cash consideration. The building was approximately 97% occupied with lease maturities through 2025. In connection with the acquisition, the Company assumed an outstanding mortgage note payable held by the joint venture totaling $12.8 million ($11.7 million including a $1.1 fair value adjustment) which bears an effective interest rate of 6.43% and matures in 2021. Prior to the acquisition, the Company had a 50% equity investment in the joint venture totaling approximately $1.7 million which it accounted for under the equity method. In connection with the acquisition, the Company re-measured its previously held equity interest at the acquisition-date fair value and recognized a gain on the re-measurement of approximately $2.7 million which was recognized as income;

• a 51,903 square foot specialty inpatient facility in Arizona for a purchase price of approximately $15.5 million. The building was 100% occupied by one tenant whose lease expires in 2024;

57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

• a medical office building with 146,097 square feet in Indiana for a purchase price of approximately $25.8 million. The building was 100% occupied with lease expiration dates ranging from 2011 to 2021;

• four medical office buildings in Iowa, aggregating 155,189 square feet, were acquired by a joint venture (HR Ladco Holdings, LLC), in which the Company has an 80% controlling interest, for a total purchase price of approximately $44.6 million. All four buildings were 100% leased upon acquisition with lease expirations ranging from 2010 through 2029. Three of the buildings were constructed by the Company’s joint venture partner, and the construction was funded by the Company through a construction loan. Upon acquisition of the buildings by the joint venture, $30.8 million of the Company’s construction loan was converted to a permanent mortgage note payable to the Company, which is eliminated in consolidation, with the remaining balance of the construction loan of $5.0 million added to the Company’s equity investment in the joint venture; and

• a mortgage note receivable was originated for $9.9 million in connection with a medical office building in Iowa.

          A summary of the Company’s 2009 acquisitions follows:

						Mortgage			Mortgage
	Dates	Cash		Real		Note			Notes Payable						Square
(Dollars in millions)	Acquired	Consideration		Estate		Financing			Assumed			Other			Footage
Real estate acquisitions
Oregon (1)	01/16/09	$	4.4	$	20.5	$	—		$	(11.7	)	$	(4.4	)		62,246
Arizona	10/20/09		16.0		16.0		—			—			—			51,903
Indiana	12/18/09		28.2		26.0		—			—			2.2			146,097
Iowa	2/23/09, 7/16/09		6.8		43.9		(35.7	)		—			(1.4	)		155,189
	7/23/09, 12/08/09
			55.4		106.4		(35.7	)		(11.7	)		(3.6	)		415,435
Mortgage note financings
Iowa	12/30/2009		9.9		—		9.9			—			—			—
Total 2009 Acquisitions		$	65.3	$	106.4	$	(25.8	)	$	(11.7	)	$	(3.6	)		415,435

(1) The mortgage note payable assumed in the Oregon acquisition reflects a fair value adjustment of $1.1 million recorded by the Company upon acquisition.

          The Company assigned $8.2 million to real estate lease intangible assets, net of ground lease intangible liabilities, related to its 2009 acquisitions with amortization periods ranging from 7.3 years to 75 years.

     2008 Real Estate Acquisitions

          During 2008, the Company acquired the following properties:

• two fully-leased, six-story office buildings each containing approximately 146,000 square feet, and a six-level parking structure, containing 977 parking spaces, in Dallas, Texas for purchase price of approximately $59.2 million;

• a medical office building and surgery center with 102,566 square feet in Indiana for a purchase price of approximately $28.2 million. The building is 100% occupied by three tenants with lease expiration dates ranging from 2017 to 2024;

• a portfolio of 15 medical office buildings from The Charlotte-Mecklenburg Hospital Authority and certain of its affiliates (collectively, “CHS”) for a purchase price of approximately $162.1 million, including ground lease prepayments of $8.3 million. The portfolio includes 764,092 square feet of on- and off-campus properties which are located in or around Charlotte, North Carolina and are approximately 90% occupied. CHS leases approximately 71% of the total square feet of the portfolio with lease terms averaging approximately 10 years. CHS is the third largest public health system in the United States and owns, leases and manages 23 hospitals, and operates approximately 5,000 patient beds. The weighted average

58

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

remaining lease terms for the non-CHS portion of leased space is five years. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date:

	Estimated			Estimated
	Fair Value			Useful Life
	(In millions)			(In years)
Buildings	$	140.4			20.0-39.0
Prepaid ground lease		8.3			75.0
Intangibles:
At-market lease intangibles		11.1			0.9-15.0
Below-market lease intangibles		(0.1	)		3.4
Above-market ground lease intangibles		(0.1	)		75.0
Below-market ground lease intangibles		2.5			75.0
Total intangibles		13.4			22.5
	$	162.1

• the remaining equity membership interest in a joint venture, which owns five on-campus medical office buildings in Washington, for a purchase price of approximately $14.5 million plus the assumption of outstanding debt of approximately $42.2 million, net of fair value adjustments. At the time of the acquisition, the Company had a $9.2 million net equity investment in the joint venture which it accounted for under the equity method. The debt assumed has a weighted average interest rate of 5.8% with maturities beginning in 2015. In connection with the Company’s acquisition and related transition of accounting from the joint venture to the Company, the joint venture recorded an adjustment to straight-line rent on the properties. As such, the Company recognized its portion of the adjustment through equity income of the joint venture of approximately $1.1 million (of which $0.8 million, or $0.02 per diluted share, is related to prior years);

• an 80% interest in a joint venture that concurrently acquired two medical office buildings, a specialty outpatient facility and a physician clinic in Iowa for cash consideration of approximately $25.8 million, plus the assumption of outstanding debt of approximately $1.2 million, net of a fair value adjustment. The debt assumed has an interest rate of 5.8% which matures in 2016. The accounts of the joint venture are included in the Company’s Consolidated Financial Statements; and

• a mortgage note receivable was originated for $8.0 million in connection with the construction of an ambulatory care/surgery center in Iowa.

          A summary of the Company’s 2008 acquisitions follows:

							Mortgage		Mortgage
	Date		Cash		Real		Note		Notes Payable						Square
(Dollars in millions)	Acquired		Consideration		Estate		Financing		Assumed			Other			Footgage
Real estate acquisitions
Texas		7/25/08	$	56.0	$	57.9	$	—	$	—		$	(1.9	)		291,389
Indiana		12/19/08		28.1		27.7		—		—			0.4			102,566
North and South Carolina		12/29/08		162.1		151.5		—		—			10.6			764,092
Washington (1)		11/26/08		14.5		69.7		—		(42.2	)		(13.0	)		319,561
Iowa (1)		9/30/08, 10/31/08		25.8		28.8		—		(1.2	)		(1.8	)		145,457
				286.5		335.6		—		(43.4	)		(5.7	)		1,623,065
Mortgage note financings
Iowa		10/30/08		8.0		—		8.0		—			—			—
Total 2008 Acquisitions			$	294.5	$	335.6	$	8.0	$	(43.4	)	$	(5.7	)		1,623,065

(1) The mortgage notes payable assumed in the Washington and Iowa acquisitions reflect fair value adjustments of $7.2 million and $0.2 million, respectively, recorded by the Company upon acquisition.

59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

          The Company assigned $23.7 million to intangible assets net of intangible liabilities, related to the 2008 acquisitions as shown in the table below.

	Intangibles			Amortization
	Assigned			Periods
	(In thousands)			(In years)
Above-market lease intangibles	$	1,297			2.0-16.5
Below-market lease intangibles		(6,615	)		4.3-12.3
At-market lease intangibles		25,277			2.0-16.5
Above-market ground lease intangibles		(128	)		75
Below-market ground lease intangibles		3,850			56.5-93.1
	$	23,681			17.7

     2009 Real Estate Dispositions

          During 2009, the Company disposed of the following properties:

• an 11,538 square foot medical office building in Florida in which the Company had a total gross investment of approximately $1.4 million ($1.0 million, net) was sold for approximately $1.4 million in net proceeds, and the Company recognized a $0.4 million net gain on the sale;

• a 139,647 square foot medical office building in Wyoming to the sponsor for $21.4 million. During 2008, the Company received a $2.4 million deposit from the sponsor on the sale and received a $7.2 million termination fee from the sponsor in accordance with its financial support agreement with the Company. In 2009, the Company received the remaining consideration of approximately $19.0 million (plus $0.2 million of interest). The Company had an aggregate investment of approximately $20.0 million ($15.8 million, net) in the medical office building and recognized a gain on sale of approximately $5.6 million;

• the Company’s membership interests in an entity which owns an 86,942 square foot medical office building in Washington. The Company acquired the entity in December 2008 and had an aggregate and net investment of approximately $10.7 million. The Company received approximately $5.3 million in net proceeds, and the purchaser assumed the mortgage note secured by the property of approximately $5.4 million. The Company recognized an insignificant impairment charge on the disposition related to closing costs;

• a 198,064 square foot medical office building in Nevada in which the Company had a gross investment of approximately $46.8 million ($32.7 million, net) was sold for approximately $38.0 million in net proceeds, and the Company concurrently paid off a $19.5 million mortgage note secured by the property. The Company recognized a gain on sale of approximately $6.5 million, net of liabilities of $1.2 million;

• a 113,555 square foot specialty inpatient facility in Michigan in which the Company had a gross investment of approximately $13.9 million ($10.8 million, net) was sold for approximately $18.5 million in net proceeds, and the Company recognized a gain on sale of approximately $7.5 million, net of liabilities of $0.2 million;

• a 10,255 square foot ambulatory surgery center in Florida in which the Company had a gross investment of approximately $3.4 million ($2.0 million, net) was sold for approximately $0.5 million in net cash proceeds and title to a land parcel adjoining another medical office building owned by the Company valued at $1.5 million. The Company recognized no gain on the transaction; and

• an 8,243 square foot physician clinic in Virginia in which the Company had a gross investment of approximately $0.7 million ($0.5 million, net) was sold for approximately $0.6 million in net proceeds, and the Company recognized a gain on sale of approximately $0.1 million.

     2009 Mortgage Note Repayment

          During 2009, one mortgage note receivable totaling approximately $12.6 million was repaid. This mortgage note, which provided financing for the construction of a building in Iowa, was repaid upon acquisition of the building by a third party.

60

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

          A summary of the Company’s 2009 dispositions follows:

			Net Real		Other			Mortgage
	Net		Estate		(Including			Note		Gain/		Square
(Dollars in millions)	Proceeds		Investment		Receivables)			Receivable		(Loss)		Footage
Real estate dispositions
Florida	$	1.4	$	1.0	$	—		$	—	$	0.4		11,538
Wyoming (1)		21.4		15.8		—			—		5.6		139,647
Washington		5.3		10.7		(5.4	)		—		0.0		86,942
Nevada		38.0		32.7		(1.2	)		—		6.5		198,064
Michigan		18.5		10.8		0.2			—		7.5		113,555
Florida		0.5		0.5		—			—		—		10,255
Virginia		0.6		0.5		—			—		0.1		8,243
		85.7		72.0		(6.4	)		—		20.1		568,244
Mortgage note repayments		12.6		—		—			12.6		—		—
Total 2009 Dispositions	$	98.3	$	72.0	$	(6.4	)	$	12.6	$	20.1		568,244

(1) Net proceeds include $2.4 million in proceeds received in 2008 as a deposit for the Wyoming property sale.

     2008 Real Estate Dispositions

          During 2008, the Company disposed of the following properties:

• a 10,818 square foot physician clinic in Texas in which the Company had a gross investment of approximately $1.5 million ($1.3 million, net) was sold for $1.6 million in net proceeds, and the Company recognized a $0.3 million net gain from the sale;

• a 4,913 square foot ambulatory surgery center in California in which the Company had a gross investment of approximately $1.0 million ($0.6 million, net) was sold for $1.0 million in net proceeds, and the Company recognized a $0.4 million net gain from the sale;

• a 36,951 square foot building in Mississippi in which the Company had a gross investment of approximately $2.9 million ($1.6 million, net) was sold for $1.9 million in net proceeds, and the Company recognized a $0.3 million net gain from the sale;

• a 7,500 square foot physician clinic in Texas in which the Company had a total gross investment of approximately $0.5 million ($0.4 million, net) was sold for $0.5 million in net proceeds, and the Company recognized a $0.1 million net gain from the sale;

• pursuant to a purchase option exercised by a tenant in the third quarter of 2008, a 25,456 square foot physician clinic in Tennessee in which the Company had a gross investment of approximately $3.3 million ($2.3 million, net) was sold for $3.0 million in net proceeds, and the Company recognized a $0.7 million net gain from the sale;

• a parcel of land in Pennsylvania was sold for approximately $0.8 million in net proceeds, which approximated the Company’s net book value;

• pursuant to a purchase option exercised by a tenant in 2007, an 83,718 square foot medical office building in Texas in which the Company had a gross investment of approximately $18.5 million ($10.4 million, net) was sold for net proceeds of $18.7 million. The Company recognized an $8.0 million net gain from the sale, net of receivables of $0.3 million;

• a parcel of land held for development in Illinois was sold for $9.0 million in net proceeds. The Company’s investment in the land was $8.6 million and it recognized $0.4 million net gain from the sale, which is recorded in other income (expense) on the Company’s Consolidated Statement of Income; and

• a 7,093 square foot building in Virginia in which the Company had a gross investment of approximately $1.0 million ($0.5 million, net) was sold for $0.4 million in net proceeds, resulting in a $0.1 million impairment.

61

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

     2008 Mortgage Note Repayment

          During 2008, one mortgage note receivable totaling approximately $2.5 million was repaid.

     2008 Joint Venture Equity Interest Disposition

          During 2008, a portion of the Company’s preferred equity investment in a joint venture, in which it owned a 10% equity ownership interest, was redeemed for $5.5 million.

          A summary of the Company’s 2008 dispositions follows:

			Net Real		Other		Mortgage
	Net		Estate		(Including		Note		Gain/			Square
(Dollars in millions)	Proceeds		Investment		Receivables)		Receivable		(Loss)			Footage
Real estate dispositions
Texas	$	1.6	$	1.3	$	—	$	—	$	0.3			10,818
California		1.0		0.6		—		—		0.4			4,913
Mississippi		1.9		1.6		—		—		0.3			36,951
Texas		0.5		0.4		—		—		0.1			7,500
Tennessee		3.0		2.3		—		—		0.7			25,456
Pennsylvania (land)		0.8		0.8		—		—		—			—
Texas		18.7		10.4		0.3		—		8.0			83,718
Illinois (land held for development) (1)		9.0		8.6		—		—		0.4			—
Virginia		0.4		0.5		—		—		(0.1	)		7,093
		36.9		26.5		0.3		—		10.1			176,449
Mortgage note repayments		2.5		—		—		2.5		—			—
Joint venture preferred equity interest
Utah		5.5		—		5.5		—		—			—
Total 2008 Dispositions	$	44.9	$	26.5	$	5.8	$	2.5	$	10.1			176,449

(1) The gain related to the sale of this land parcel is recognized in other income (expense) on the Company’s Consolidated Statement of Income.

     2010 Disposition

          In January 2010, pursuant to a purchase option with an operator, the Company disposed of five properties in Virginia. The Company’s aggregate net investment in the buildings was approximately $16.0 million at December 31, 2009. The Company received approximately $19.2 million in net proceeds and $0.8 million in lease termination fees. The Company expects to recognize a gain on sale of approximately $2.7 million, including the write-off of approximately $0.5 million of straight-line rent receivables.

5. Discontinued Operations

          The major categories of assets and liabilities of properties sold or to be sold are classified as held for sale, to the extent not sold, on the Company’s Consolidated Balance Sheets, and the results of operations of such properties are included in discontinued operations on the Company’s Consolidated Statements of Income for all periods. Properties classified as held for sale at December 31, 2009 include the properties discussed in “2010 Disposition” in Note 4, as well as one other property that the Company decided to sell in 2007.

          The tables below reflect the assets and liabilities of the properties classified as held for sale and discontinued operations as of December 31, 2009 and the results of operations of the properties included in discontinued operations on the Company’s Consolidated Statements of Income for the periods ended December 31, 2009, 2008 and 2007.

62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	December 31,
(Dollars in thousands)	2009			2008
Balance Sheet data (as of the period ended):
Land	$	3,374		$	9,503
Buildings, improvements and lease intangibles		22,178			109,596
Personal property		—			30
		25,552			119,129
Accumulated depreciation		(8,697	)		(29,905	)
Assets held for sale, net		16,855			89,224
Other assets, net (including receivables)		890			1,009
Assets of discontinued operations, net		890			1,009
Assets held for sale and discontinued operations, net	$	17,745		$	90,233
Notes and bonds payable	$	—		$	5,452
Liabilities held for sale		—			5,452
Notes and bonds payable		—			23,281
Accounts payable and accrued liabilities		—			409
Other liabilities		251			3,679
Liabilities of discontinued operations		251			27,369
Liabilities held for sale and discontinued operations	$	251		$	32,821

63

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Year Ended December 31,
(Dollars in thousands, except per share data)	2009			2008			2007
Statements of Income data (for the period ended):
Revenues (1)
Master lease rent	$	4,242		$	6,887		$	15,691
Property operating		828			7,999			8,125
Straight-line rent		(102	)		(9	)		84
Mortgage interest		—			—			1,841
Other operating		216			8,014			18,813
		5,184			22,891			44,554
Expenses (2)
General and administrative		—			(26	)		—
Property operating		969			3,902			4,134
Other operating		—			—			16,688
Bad debts, net of recoveries		(20	)		71			(24	)
Depreciation		1,039			2,331			5,897
Amortization		—			25			38
		1,988			6,303			26,733
Other Income (Expense) (3)
Interest expense		(667	)		(2,008	)		(2,378	)
Interest and other income, net		284			25			278
		(383	)		(1,983	)		(2,100	)
Income from Discontinued Operations		2,813			14,605			15,721
Impairments (4)		(22	)		(886	)		(7,089	)
Gain on sales of real estate properties (5)		20,136			9,843			40,405
Discontinued Operations	$	22,927		$	23,562		$	49,037
Income from Discontinued Operations per common share — basic	$	0.40		$	0.46		$	1.03
Income from Discontinued Operations per common share — diluted	$	0.39		$	0.44		$	1.01

(1)	Total revenues for the years ended December 31, 2009, 2008 and 2007 include $0, $0 and $27.4 million, respectively, related to the sale of the senior living assets; $1.9 million, $19.6 million (including a $7.2 million fee received from an operator to terminate its financial support agreement with the Company) and $13.9 million, respectively, related to other properties sold; and $3.3 million, $3.3 million and $3.3 million, respectively, related to six properties held for sale at December 31, 2009.
(2)	Total expenses for the years ended December 31, 2009, 2008 and 2007 include $0, $0 and $19.0 million, respectively, related to the sale of the senior living assets; $0.9 million, $6.0 million and $7.1 million, respectively, related to other properties sold; and $1.1 million, $0.3 million and $0.6 million, respectively, related to six properties held for sale at December 31, 2009.
(3)	Other income (expense) for the years ended December 31, 2009, 2008 and 2007 include ($0.2) million, ($0.3) million and ($0.4) million related to properties held for sale; ($0.5) million, ($1.7) million and ($1.7) million related to other properties sold; and December 31, 2009 also includes $0.3 million related to the sale of the senior living assets.
(4)	Impairments for the year ended December 31, 2009 includes $0.02 million related to one property sold; December 31, 2008 includes approximately $0.6 million related to one property held for sale and $0.3 million related to three properties sold; December 31, 2007 includes $6.6 million related to four properties sold and $0.5 million related to one property held for sale.
(5)	Gain on sales of real estate properties for the year ended December 31, 2009 includes $20.1 million related to six properties sold; December 31, 2008 includes $9.8 million related to six properties sold; December 31, 2007 includes $40.2 million related to the sale of senior living assets during 2007 and $0.2 million related to the sale of a property pursuant to a purchase option exercised by the operator.

6. Impairment Charges

          A Company must assess the potential for impairment of its long-lived assets, including real estate properties, whenever events occur or there is a change in circumstances, such as the sale of a property or the decision to sell a property, that indicates that the recorded

64

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

value might not be fully recoverable. An asset is impaired when undiscounted cash flows expected to be generated by the asset are less than the carrying value of the asset.

     The Company recorded impairment charges, which are included in continuing operations, for the year ended December 31, 2008 totaling $1.6 million related to changes in management’s estimate of fair value and collectibility of patient receivables assigned to the Company in late 2005 resulting from a lease termination and debt restructuring of a physician clinic owned by the Company. No such impairment charges resulted from the Company’s assessments for the years ending December 31, 2009 or 2007.

     The Company also recorded impairment charges, which are included in discontinued operations, for the years ended December 31, 2009, 2008 and 2007 totaling $0.02 million, $0.9 million and $7.1 million, respectively, relating to properties that were sold or classified as held for sale.

7. Other Assets

     Other assets consist primarily of straight-line rent receivables, prepaids, intangible assets, and receivables. Items included in other assets on the Company’s Consolidated Balance Sheets as of December 31, 2009 and 2008 are detailed in the table below.

	December 31,
(Dollars in millions)	2009			2008
Straight-line rent receivables	$	25.2		$	23.2
Prepaid assets		24.7			21.0
Deferred financing costs, net		12.1			3.1
Above-market intangible assets, net		12.0			11.7
Accounts receivable		9.0			10.3
Goodwill		3.5			3.5
Notes receivable		3.3			0.5
Equity investments in joint ventures		1.3			2.8
Customer relationship intangible assets, net		1.2			1.2
Allowance for uncollectible accounts		(3.7	)		(3.3	)
Other		0.9			3.0
	$	89.5		$	77.0

Equity Investments in Joint Ventures

     At December 31, 2009 and 2008, the Company had investments in one and two unconsolidated joint ventures, respectively, which had investments in real estate properties. In January 2009, the Company acquired the remaining membership interest in one of its joint ventures previously accounted for under the equity method. The Company accounts for its remaining joint venture investment under the cost method. The Company’s net investments in the joint ventures are included in other assets on the Company’s Consolidated Balance Sheets, and the related income or loss is included in interest and other income, net on the Company’s Consolidated Statements of Income.

     The Company recognized income related to the joint venture accounted for under the cost method of approximately $0.3 million, $0.7 million and $1.1 million, respectively, for the years ended December 31, 2009, 2008 and 2007.

	December 31,
(Dollars in thousands)	2009			2008			2007
Net joint venture investments, beginning of year	$	2,784		$	18,356		$	20,079
Equity in income (losses) recognized during the year		(2	)		1,021			(309	)
Acquisition of remaining equity interest in a joint venture		(1,700	)		(10,165	)		—
Partial redemption of preferred equity investment in an unconsolidated joint venture		—			(5,546	)		—
Additional investment in a joint venture		184			—			—
Distributions received during the year		—			(882	)		(1,414	)
Net joint venture investments, end of year	$	1,266		$	2,784		$	18,356

65

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

8. Intangible Assets and Liabilities

     The Company has several types of intangible assets and liabilities included in its Consolidated Balance Sheets, including goodwill, deferred financing costs, above-, below-, and at-market lease intangibles, and customer relationship intangibles. The Company’s intangible assets and liabilities as of December 31, 2009 and 2008 consisted of the following:

	Gross						Accumulated
	Balance at						Amortization						Weighted
	December 31,						at December 31,						Avg. Life		Balance Sheet
(Dollars in millions)	2009			2008			2009			2008			(Years)		Classification
Goodwill	$	3.5		$	3.5		$	—		$	—			N/A	Other assets
Deferred financing costs		17.1			11.4			5.0			8.3			4.1	Other assets
Above-market lease intangibles		12.8			12.2			0.8			0.5			49.1	Other assets
Customer relationship intangibles		1.4			1.4			0.2			0.2			33.6	Other assets
Below-market lease intangibles		(7.2	)		(7.2	)		(1.8	)		(0.7	)		9.8	Other liabilities
At-market lease intangibles		72.9			65.3			43.7			38.5			9.4	Real estate properties
	$	100.5		$	86.6		$	47.9		$	46.8			18.7

     Amortization of the Company’s intangible assets and liabilities, in place as of December 31, 2009, is expected to be approximately $7.7 million, $7.1 million, $6.2 million, $3.6 million, and $3.2 million, respectively, for the years ended December 31, 2010 through 2014.

9. Notes and Bonds Payable

     The table below details the Company’s notes and bonds payable. At December 31, 2008, the Company had classified four mortgage notes payable totaling $28.7 million as liabilities held for sale and discontinued operations on the Company’s Consolidated Balance Sheet that were subsequently repaid. As such, those mortgage notes are not reflected in the December 31, 2008 balances in the following table:

	December 31,
(Dollars in thousands)	2009		2008
Unsecured Credit Facility due 2012	$	50,000	$	—
Unsecured Credit Facility due 2010		—		329,000
Senior Notes due 2011, including premium		286,655		286,898
Senior Notes due 2014, net of discount		264,090		263,961
Senior Notes due 2017, net of discount		297,988		—
Mortgage notes payable, net of discount		147,689		60,327
	$	1,046,422	$	940,186

     The Company’s various debt agreements contain certain representations, warranties, and financial and other covenants customary in such loan agreements. Among other things, these provisions require the Company to maintain certain financial ratios and minimum tangible net worth (as defined in the agreement) and impose certain limits on the Company’s ability to incur indebtedness and create liens or encumbrances. At December 31, 2009, the Company was in compliance with its financial covenant provisions under its various debt instruments.

Unsecured Credit Facility due 2012

     On September 30, 2009, the Company entered into an amended and restated $550.0 million unsecured credit facility (the “Unsecured Credit Facility”) with a syndicate of 16 lenders that matures on September 30, 2012. Amounts outstanding under the Unsecured Credit Facility will bear interest at a rate equal to (x) LIBOR or the base rate (defined as the highest of (i) the Federal Funds Rate plus 0.5%; (ii) the Bank of America prime rate and (iii) LIBOR) plus (y) a margin ranging from 2.15% to 3.20% (currently 2.80%) for LIBOR-based loans and 0.90% to 1.95% for base rate loans (currently 1.55%), based upon the Company’s unsecured debt ratings. In addition, the Company pays a facility fee per annum on the aggregate amount of commitments. The facility fee is 0.40% per annum, unless the Company’s credit rating falls below a BBB-/Baa3, at which point the facility fee would be 0.50%. At December 31, 2009, the

66

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Company had $50.0 million outstanding under the facility with a weighted average interest rate of approximately 3.03% and had borrowing capacity remaining, under its financial covenants, of approximately $500.0 million.

     Unsecured Credit Facility due 2010

          The Company’s $400.0 million unsecured credit facility due 2010 was repaid on September 30, 2009 with proceeds from the Unsecured Credit Facility. The $400.0 million unsecured credit facility bore interest at a rate equal to (x) LIBOR or the base rate (defined as the higher of the Bank of America prime rate or the Federal Funds rate plus 0.50%) plus (y) a margin ranging from 0.60% to 1.20% (0.90% at September 30, 2009), based upon the Company’s unsecured debt ratings. Additionally, the Company paid a facility fee per annum on the aggregate amount of commitments, ranging from 0.15% to 0.30% per annum (0.20% at September 30, 2009), based on the Company’s unsecured debt ratings. Upon repayment of the $400.0 million unsecured credit facility on September 30, 2009, the Company had $368.0 million outstanding on the facility with a weighted average interest rate of approximately 1.27%.

     Senior Notes due 2011

          In 2001, the Company publicly issued $300.0 million of unsecured senior notes due 2011 (the “Senior Notes due 2011”). The Senior Notes due 2011 bear interest at 8.125%, payable semi-annually on May 1 and November 1, and are due on May 1, 2011, unless redeemed earlier by the Company. During 2008, the Company repurchased $13.7 million of the Senior Notes due 2011. The notes were originally issued at a discount of approximately $1.5 million, which yielded an 8.202% interest rate per annum upon issuance. The original discount is combined with the premium resulting from the termination of interest rate swaps in 2006 that were entered into to offset changes in the fair value of $125.0 million of the notes. The net premium is combined with the principal balance of the Senior Notes due 2011 on the Company’s Consolidated Balance Sheets and is being amortized against interest expense over the remaining term of the notes yielding an effective interest rate on the notes of 7.896%. For each of the years ended December 31, 2009, 2008 and 2007, the Company amortized approximately $0.2 million of the net premium which is included in interest expense on the Company’s Consolidated Statements of Income. The following table reconciles the balance of the Senior Notes due 2011 on the Company’s Consolidated Balance Sheets as of December 31, 2009 and 2008.

	December 31,
(Dollars in thousands)	2009		2008
Senior Notes due 2011 face value	$	286,300	$	286,300
Unamortized net gain (net of discount)		355		598
Senior Notes due 2011 carrying amount	$	286,655	$	286,898

     Senior Notes due 2014

          In 2004, the Company publicly issued $300.0 million of unsecured senior notes due 2014 (the “Senior Notes due 2014”). The Senior Notes due 2014 bear interest at 5.125%, payable semi-annually on April 1 and October 1, and are due on April 1, 2014, unless redeemed earlier by the Company. During 2008, the Company repurchased approximately $35.3 million of the Senior Notes due 2014. The notes were issued at a discount of approximately $1.5 million, which yielded a 5.19% interest rate per annum upon issuance. For each of the years ended December 31, 2009, 2008 and 2007, the Company amortized approximately $0.1 million of the discount which is included in interest expense on the Company’s Consolidated Statements of Income. The following table reconciles the balance of the Senior Notes due 2014 on the Company’s Consolidated Balance Sheets as of December 31, 2009 and 2008:

	December 31,
(Dollars in thousands)	2009			2008
Senior Notes due 2014 face value	$	264,737		$	264,737
Unaccreted discount		(647	)		(776	)
Senior Notes due 2014 carrying amount	$	264,090		$	263,961

     Senior Notes due 2017

          On December 4, 2009, the Company publicly issued $300.0 million of unsecured senior notes due 2017 (the “Senior Notes due 2017”). The Senior Notes due 2017 bear interest at 6.50%, payable semi-annually on January 17 and July 17, and are due on January 17, 2017, unless redeemed earlier by the Company. The notes were issued at a discount of approximately $2.0 million, which yielded a 6.618% interest rate per annum upon issuance. For the year ended December 31, 2009, the Company amortized approximately $0.02

67

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

million of the discount which is included in interest expense on the Company’s Consolidated Statement of Income. The following table reconciles the balance of the Senior Notes due 2017 on the Company’s Consolidated Balance Sheet as of December 31, 2009:

	December 31,
(Dollars in thousands)	2009
Senior Notes due 2017 face value	$	300,000
Unaccreted discount		(2,012	)
Senior Notes due 2017 carrying amount	$	297,988

     Senior Note Repurchases

          During 2008, the Company repurchased $13.7 million of the Senior Notes due 2011 and $35.3 million of the Senior Notes due 2014, amortized a pro-rata portion of the premium or discount related to the notes and recognized a net gain of $4.1 million. The Company may elect, from time to time, to repurchase and retire its notes when market conditions are appropriate.

     Mortgage Notes Payable

          The following table details the Company’s mortgage notes payable, with related collateral. At December 31, 2008, the Company had classified four mortgage notes payable totaling $28.7 million to liabilities held for sale and discontinued operations on the Company’s Consolidated Balance Sheet. As such, the four mortgages are not shown in the table below.

											Investment in
			Effective					Number			Collateral at		Balance at
	Original		Interest			Maturity		of Notes			December 31,		December 31,
(Dollars in millions)	Balance		Rate (11)			Date		Payable (12)		Collateral (13)	2009		2009		2008
Life Insurance Co. (1)	$	4.7		7.765	%		1/17		1	MOB	$	11.4	$	2.5	$	2.7
Commercial Bank (2)		11.7		7.220	%		5/11		—	2 MOB’s/1 ASC		—		—		3.7
Commercial Bank (3)		1.8		5.550	%		10/30		1	OTH		7.7		1.7		1.8
Life Insurance Co. (4)		15.1		5.490	%		1/16		1	ASC		32.5		13.9		14.2
Commercial Bank (5)		17.4		6.480	%		5/15		1	MOB		19.9		14.4		14.3
Commercial Bank (6)		12.0		6.110	%		7/15		1	2 MOBs		19.5		9.7		9.6
Commercial Bank (7)		15.2		7.650	%		7/20		1	MOB		20.2		12.8		12.8
Life Insurance Co. (8)		1.5		6.810	%		7/16		1	SOP		2.2		1.2		1.2
Commercial Bank (9)		12.8		6.430	%		2/21		1	MOB		20.5		11.6		—
Investment Fund (10)		80.0		7.250	%		12/16		1	15 MOBs		152.4		79.9		—
									9		$	286.3	$	147.7	$	60.3

(1)	Payable in monthly installments of principal and interest based on a 20-year amortization with the final payment due at maturity.
(2)	Three mortgage notes totaling $3.7 million at December 31, 2008 were defeased and repaid in full in December 2009.
(3)	Payable in monthly installments of principal and interest based on a 27-year amortization with the final payment due at maturity.
(4)	Payable in monthly installments of principal and interest based on a 10-year amortization with the final payment due at maturity.
(5)	Payable in monthly installments of principal and interest based on a 10-year amortization with the final payment due at maturity. The Company acquired this mortgage note in an acquisition during 2008 and recorded the note at its fair value, resulting in a $2.7 million discount which is included in the balance above.
(6)	Payable in monthly installments of principal and interest based on a 10-year amortization with the final payment due at maturity. The Company acquired this mortgage note in an acquisition during 2008 and recorded the note at its fair value, resulting in a $2.1 million discount which is included in the balance above.
(7)	Payable in monthly installments of interest only for 24 months and then installments of principal and interest based on an 11-year amortization with the final payment due at maturity. The Company acquired this mortgage note in an acquisition during 2008 and recorded the note at its fair value, resulting in a $2.4 million discount which is included in the balance above.
(8)	Payable in monthly installments of principal and interest based on a 9-year amortization with the final payment due at maturity. The Company acquired this mortgage note in an acquisition during 2008 and recorded the note at its fair value, resulting in a $0.2 million discount which is included in the balance above.
(9)	Payable in monthly installments of principal and interest based on a 12-year amortization with the final payment due at maturity. The Company acquired this mortgage note in an acquisition during 2009 and recorded the note at its fair value, resulting in a $1.0 million discount which is included in the balance above.

68

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(10)	Payable in monthly installments of principal and interest based on a 30-year amortization with a 7-year initial term (maturity 12/01/16) and the option to extend the initial term for two, one-year floating rate extension terms.
(11)	The contractual interest rates for the nine outstanding mortgage notes ranged from 5.00% to 7.625% at December 31, 2009.
(12)	Number of mortgage notes payable outstanding at December 31, 2009.
(13)	MOB-Medical office building; ASC-Ambulatory care/surgery; SOP-Specialty outpatient; OTH-Other.

          The following mortgage notes payable were classified to liabilities held for sale and discontinued operations on the Company’s Consolidated Balance Sheet at December 31, 2008. During 2009, three of the mortgage notes totaling approximately $9.2 million were repaid and one mortgage note totaling $19.5 million was assumed by the buyer upon sale of the related real estate property.

											Investment in		Contractual
			Effective					Number			Collateral at		Balance at
	Original		Interest			Maturity		of Notes			December 31,		December 31,
(Dollars in millions)	Balance		Rate (4)			Date		Payable		Collateral (5)	2008		2008
Life Insurance Co. (1)	$	23.3		7.765	%		7/26		1	MOB	$	46.8	$	19.5
Commercial Bank (2)		11.7		7.220	%		5/11		2	3 MOBs		23.0		3.7
Commercial Bank (3)		5.5		6.500	%		1/27		1	MOB		10.7		5.5
									4		$	80.5	$	28.7

(1)	Payable in monthly installments of principal and interest based on a 30-year amortization with the final payment due at maturity. The mortgage note was assumed by the buyer upon sale of the property in March 2009.
(2)	Payable in fully amortizing monthly installments of principal and interest due at maturity. Defeased and repaid in full in December 2009.
(3)	Payable in fully amortizing monthly installments of principal and interest due at maturity. The mortgage note was assumed by the buyer upon sale of the property in February 2009.
(4)	The contractual interest rates for the four outstanding mortgage notes included in liabilities held for sale and discontinued operations ranged from 6.5% to 8.5% at December 31, 2008.
(5)	MOB-Medical office building

     Other Long-Term Debt Information

          Future maturities of the Company’s notes and bonds payable as of December 31, 2009 were as follows:

			Discount/			Total
	Principal		Premium			Notes and
(Dollars in thousands)	Maturities		Amortization (2)			Bonds Payable		%
2010	$	2,386	$	(1,013	)	$	1,373		0.1	%
2011		288,843		(1,260	)		287,583		27.5	%
2012 (1)		52,707		(1,434	)		51,273		4.9	%
2013		2,889		(1,520	)		1,369		0.1	%
2014		267,818		(1,499	)		266,319		25.5	%
2015 and thereafter		441,748		(3,243	)		438,505		41.9	%
	$	1,056,391	$	(9,969	)	$	1,046,422		100.0	%

(1)	Includes $50.0 million outstanding on the Unsecured Credit Facility.
(2)	Includes discount and premium amortization related to the Company’s Senior Notes due 2011, Senior Notes due 2014, and Senior Notes due 2017 and discount amortization related to five mortgage notes payable.

10. Stockholders’ Equity

     Common Stock

          The Company had no preferred shares outstanding and had common shares outstanding for the three years ended December 31, 2009 as follows:

69

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Year Ended December 31,
	2009		2008		2007
Balance, beginning of year		59,246,284		50,691,331		47,805,448
Issuance of stock		1,244,914		8,373,014		2,833,434
Restricted stock-based awards, net of forfeitures		123,733		181,939		52,449
Balance, end of year		60,614,931		59,246,284		50,691,331

     At-The-Market Equity Offering Program

          On December 31, 2008, the Company entered into a sales agreement with Cantor Fitzgerald & Co. to sell up to 2,600,000 shares of its common stock through an at-the-market equity offering program under which Cantor Fitzgerald acts as agent and/or principal. During 2009, the Company sold 1,201,600 shares of common stock, at prices ranging from $21.62 per share to $22.50 per share, generating approximately $25.7 million in net proceeds. In January 2010, the Company sold an additional 698,700 shares of common stock under the plan for net proceeds totaling approximately $14.9 million. On February 22, 2010, the Company entered into a new sales agreement with Cantor Fitzgerald to sell up to 5,000,000 shares of its common stock through the at-the-market equity offering program. The 5,000,000 shares include 699,700 shares that remain unsold under the prior sales agreement and 4,300,300 new shares. This agreement supersedes the prior sales agreement.

     Equity Offerings

          On September 29, 2008, the Company sold 8,050,000 shares of common stock, par value $0.01 per share, at $25.50 per share in an underwritten public offering pursuant to the Company’s existing effective registration statement. The net proceeds of the offering, after underwriting discounts and commissions and estimated offering expenses, were approximately $196.0 million.

          On September 28, 2007, the Company sold 2,760,000 shares of common stock, par value $0.01 per share, at $24.85 per share to an investment bank pursuant to the Company’s existing effective registration statement. The transaction generated approximately $68.4 million in net proceeds to the Company.

     Dividends Declared

          During 2009, the Company declared and paid quarterly common stock dividends in the amounts of $0.385 per share.

          On February 2, 2010, the Company declared a quarterly common stock dividend in the amount of $0.30 per share payable on March 4, 2010 to stockholders of record on February 18, 2010.

     Authorization to Repurchase Common Stock

          In 2006, the Company’s Board of Directors authorized management to repurchase up to 3,000,000 shares of the Company’s common stock. As of December 31, 2009, the Company had not repurchased any shares under this authorization. The Company may elect, from time to time, to repurchase shares either when market conditions are appropriate or as a means to reinvest excess cash flows. Such purchases, if any, may be made either in the open market or through privately negotiated transactions.

     Accumulated Other Comprehensive Loss

          During the year ended December 31, 2009, the Company recorded a $1.9 million reduction to future benefit obligations related to its pension plans, resulting in a decrease to other liabilities, with an offset to accumulated other comprehensive loss which is included in stockholders’ equity on the Company’s Consolidated Balance Sheet. The reduction to the benefit obligation is primarily due to the one-time cash payment of $2.3 million in January 2009 to its chief executive officer resulting from the curtailment and partial settlement of his future pension benefit. For the year ended December 31, 2008, the Company recorded $2.1 million in additional benefit obligations related to its pension plans, resulting in an increase to other liabilities, with an offset to accumulated other comprehensive loss, included in stockholders’ equity, on the Company’s Consolidated Balance Sheet.

70

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

11. Benefit Plans

     Executive Retirement Plan

          The Company has an Executive Retirement Plan, under which certain officers designated by the Compensation Committee of the Board of Directors may receive upon normal retirement (defined to be when the officer reaches age 65 and has completed five years of service with the Company) an amount equal to 60% of the officer’s final average earnings (defined as the average of the executive’s highest three years’ earnings) plus 6% of final average earnings times years of service after age 60 (but not more than five years), less 100% of certain other retirement benefits received by the officer to be paid either in lump sum or in monthly installments over a period not to exceed the greater of the life of the retired officer or his surviving spouse.

          In December 2008, the Company froze the maximum annual benefits payable under the plan at $896,000 as a cost savings measure. This revision resulted in a curtailment of benefits under the retirement plan for the Company’s chief executive officer. In consideration of the curtailment and as partial settlement of benefits under the retirement plan, the Company paid a one-time cash payment of $2.3 million to its chief executive officer in January 2009. Also, in connection with the partial settlement, the chief executive officer agreed to receive his remaining retirement benefits under the plan in installment payments upon retirement, rather than in a lump sum. Of the two remaining officers in the plan, one has elected to receive their benefits in monthly installments and one has elected a lump sum payment upon retirement.

          At December 31, 2009, only the Company’s chief executive officer was eligible to retire under the plan. Assuming he retired and received full retirement benefits based upon the terms of the plan, the future benefits to be paid are estimated to be approximately $29.9 million which would be paid in annual installments of approximately $0.9 million, increasing annually based on CPI. The Company also has one other officer to whom it is currently making benefit payments of approximately $84,000 per year that retired under the plan.

          In November 2008, an officer and participant in the Executive Retirement Plan voluntarily resigned from employment. The officer was eligible to receive a lump-sum distribution of earned benefits under this plan of approximately $4.5 million. The Company granted the officer an equivalent number of shares of common stock in satisfaction of this pension benefit, resulting in a curtailment and partial settlement of the plan. The Company also recognized $1.1 million in additional compensation expense, a component of general and administrative expense, related to the settlement of the officer’s pension benefit. See Note 12.

     Retirement Plan for Outside Directors

          The Company had a retirement plan for outside directors under which a director may receive upon normal retirement (defined to be when the director reaches age 65 and has completed at least five years of service or when the director reaches age 60 and has completed at least 15 years of service) payment annually, for a period equal to the number of years of service as a director but not to exceed 15 years, an amount equal to the director’s annual retainer and meeting fee compensation (for 2009 this amount ranged from $32,000 to $44,000) immediately preceding retirement from the Board. In November 2009, the Company terminated the Outside Director Plan. As a result, lump sum payments totaling approximately $2.6 million will be paid in November 2010, or earlier upon retirement, to the eight directors currently participating in the plan.

     Retirement Plan Information

          Net periodic benefit cost for both the Executive Retirement Plan and the Retirement Plan for Outside Directors (the “Plans”) for the three years in the period ended December 31, 2009 is comprised of the following:

(Dollars in thousands)	2009			2008		2007
Service cost	$	286		$	1,288	$	1,022
Interest cost		926			1,190		943
Effect of settlement		1,005			1,143		—
Amortization of net gain/loss		669			758		442
	$	2,886		$	4,379	$	2,407
Net loss (gain) recognized in other comprehensive income		(1,868	)		2,115		311
Total recognized in net periodic benefit cost and accumulated other comprehensive loss	$	1,018		$	6,494	$	2,718

          The Company estimates that approximately $0.7 million of the net loss recognized in accumulated other comprehensive loss will be amortized to expense in 2010.

71

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

          The Plans are unfunded, and benefits will be paid from earnings of the Company. The following table sets forth the benefit obligations as of December 31, 2009 and 2008.

(Dollars in thousands)	2009			2008
Benefit obligation at beginning of year	$	17,488		$	15,642
Service cost		286			1,288
Interest cost		926			1,190
Benefits paid		(2,384	)		(4,648	)
Curtailment gain		(14	)		(342	)
Settlement loss		1,005			1,461
Actuarial gain/loss, net		(1,185	)		2,897
Benefit obligation at end of year	$	16,122		$	17,488

          Amounts recognized in the balance sheets are as follows:

(Dollars in thousands)	2009			2008
Net liabilities included in accrued liabilities	$	(11,529	)	$	(11,027	)
Amounts recognized in accumulated other comprehensive loss		(4,593	)		(6,461	)

          The Company assumed a 6.0% discount rate related to the Executive Retirement Plan and the Retirement Plan for Outside Directors and assumed a 2.7% compensation increase related to the Executive Retirement Plan as of and for each of the three years ended December 31, 2009 to measure the year-end benefit obligations and the earnings effects for the subsequent year related to the retirement plans.

          At December 31, 2009, one employee was eligible to retire under the Executive Retirement Plan. If this individual retired at normal retirement age and received full retirement benefits based upon the terms of the Executive Retirement Plan, future benefits payable are estimated to be approximately $29.9 million as of December 31, 2009. In November 2009, the Company terminated the Retirement Plan for outside Directors. As a result, lump sum payments totaling approximately $2.6 million will be paid in November 2010, or earlier upon retirement, to the non-employee directors that participated in the plan.

12. Stock and Other Incentive Plans

     2007 Employees Stock Incentive Plan

          The 2007 Employees Stock Incentive Plan (the “Incentive Plan”) authorizes the Company to issue 2,390,272 shares of common stock to its employees and directors. The Incentive Plan will continue until terminated by the Company’s Board of Directors. As of December 31, 2009, 2008 and 2007, the Company had issued, net of forfeitures, a total of 921,612, 822,706 and 29,332 shares, respectively, under the Incentive Plan for compensation-related awards to employees and directors, with a total of 1,468,660, 1,567,566 and 2,360,940 authorized shares, respectively, remaining which had not been issued. Under the Incentive Plan’s predecessor plans, the Company issued 7,151 shares in 2007 and 329,404 shares were forfeited during 2008. Restricted shares issued under the Incentive Plan are generally subject to fixed vesting periods varying from three to 10 years beginning on the date of issue. If an employee voluntarily terminates employment with the Company before the end of the vesting period, the shares are forfeited, at no cost to the Company. Once the shares have been issued, the employee has the right to receive dividends and the right to vote the shares. Compensation expense recognized during the years ended December 31, 2009, 2008 and 2007 from the amortization of the value of restricted shares issued to employees was $2.9 million, $3.7 million and $4.1 million, respectively.

          In the fourth quarters of 2009 and 2008, the Company released performance-based awards to 30 and 31, respectively, of its officers under the Incentive Plan totaling approximately $0.9 million and $3.3 million, respectively, which were granted in the form of restricted shares totaling approximately 39,500 shares and 130,400 shares, respectively. The shares have vesting periods ranging from three to eight years with a weighted average vesting period in 2009 and 2008 of approximately six years. The Company expects the issuance of the 39,500 restricted shares in 2009 will increase amortization expense in 2010 by approximately $0.1 million.

          In November 2008, an officer of the Company voluntarily resigned from employment. As a result of his resignation, the officer forfeited 329,404 in unvested restricted shares, resulting in the reversal of $1.7 million (net) in compensation expense previously recognized pertaining to these unvested shares. The officer was also a participant in the Executive Retirement Plan and was eligible to receive a lump-sum distribution of earned benefits under this plan of approximately $4.5 million. The Company granted the officer 616,500 in unrestricted common shares under the Incentive Plan, which were valued at $15.90 per share on the date of grant, in satisfaction of the lump-sum pension benefit earned under the Executive Retirement Plan of approximately $4.5 million and an additional award.

72

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

          The Incentive Plan also authorizes the Company’s Compensation Committee of its Board of Directors to grant restricted stock units or other performance units to eligible employees. Such awards, if issued, will also be subject to restrictions and other conditions as determined appropriate by the Compensation Committee. Grantees of restricted stock units will not have stockholder voting rights and will not receive dividend payments. The award of performance units does not create any stockholder rights. Upon satisfaction of certain performance targets as determined by the Compensation Committee, payment of the performance units may be made in cash, shares of common stock, or a combination of cash and common stock, at the option of the Compensation Committee. As of December 31, 2009, the Company had not granted any restricted stock units or other performance awards under the Incentive Plan.

     Non-Employee Directors’ Stock Plan

          The 1995 Restricted Stock Plan for Non-Employee Directors (the “1995 Directors’ Plan”) authorizes the Company to issue 100,000 shares to its directors. The directors’ stock issued generally has a three-year vesting period and is subject to forfeiture prior to such date upon termination of the director’s service, at no cost to the Company. As of December 31, 2009, the Company had issued all shares authorized under the plan and had issued 75,173 and 59,173 shares, respectively as of December 31, 2008 and 2007, pursuant to the 1995 Directors’ Plan. As of December 31, 2008 and 2007, a total of 24,827 and 40,827 authorized shares, respectively, had not been issued. Upon issuance of all authorized Shares under the 1995 Directors’ Plan, a portion of the directors’ 2009 restricted stock grant was issued under the Incentive Plan, Beginning in 2010, all shares granted to the directors will be issued under the Incentive Plan. For 2009, 2008 and 2007, compensation expense resulting from the amortization of the value of these shares was $0.5 million, $0.5 million, and $0.4 million, respectively.

          A summary of the activity under the Incentive Plan, and its predecessor plan, and the 1995 Directors’ Plan and related information for the three years in the period ended December 31, 2009 follows:

	2009			2008			2007
Stock-based awards, beginning of year		1,111,728			1,289,646			1,261,613
Granted		124,587			812,654			65,706
Vested		(11,536	)		(657,888	)		(35,974	)
Forfeited		—			(332,684	)		(1,699	)
Stock-based awards, end of year		1,224,779			1,111,728			1,289,646
Weighted-average grant date fair value of:
Stock-based awards, beginning of year	$	25.71		$	25.12		$	24.85
Stock-based awards granted during the year	$	21.01		$	18.18		$	34.99
Stock-based awards vested during the year	$	32.80		$	16.54		$	33.17
Stock-based awards forfeited during the year	$	—		$	24.06		$	34.89
Stock-based awards, end of year	$	25.16		$	25.71		$	25.12
Grant date fair value of shares granted during the year	$	2,617,678		$	14,773,448		$	2,298,787

          The vesting periods for the restricted shares granted during 2009 ranged from three to eight years with a weighted-average amortization period remaining at December 31, 2009 of approximately 5.8 years.

          During 2009, 2008 and 2007, the Company withheld 854, 10,935 and 9,413 shares, respectively, of common stock from its officers to pay estimated withholding taxes related to restricted stock that vested. During 2007, the Company also purchased 1,445 shares of common stock for cash from two officers whose shares vested. The shares were immediately retired.

     401(k) Plan

          The Company maintains a 401(k) plan that allows eligible employees to defer salary, subject to certain limitations imposed by the Code. The Company provides a matching contribution of up to 3% of each eligible employee’s salary, subject to certain limitations. The Company’s matching contributions were approximately $0.3 million for each of the three years ended December 31, 2009.

     Dividend Reinvestment Plan

          The Company is authorized to issue 1,000,000 shares of common stock to stockholders under the Dividend Reinvestment Plan. As of December 31, 2009, the Company had 448,253 shares issued under the plan of which 33,511 shares were issued in 2009, 24,970 shares were issued in 2008 and 63,600 were issued in 2007.

73

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

     Employee Stock Purchase Plan

          In January 2000, the Company adopted the Employee Stock Purchase Plan, pursuant to which the Company is authorized to issue shares of common stock. As of December 31, 2009, 2008 and 2007, the Company had a total of 413,414, 507,958 and 590,171 shares authorized under the Employee Stock Purchase Plan, respectively, which had not been issued or optioned. Under the Employee Stock Purchase Plan, each eligible employee in January of each year is able to purchase up to $25,000 of common stock at the lesser of 85% of the market price on the date of grant or 85% of the market price on the date of exercise of such option (the “Exercise Date”). The number of shares subject to each year’s option becomes fixed on the date of grant. Options granted under the Employee Stock Purchase Plan expire if not exercised 27 months after each such option’s date of grant. Cash received from employees upon exercising options under the Employee Stock Purchase Plan for the years ended December 31, 2009, 2008 and 2007 was $0.2 million, $0.2 million and $0.3 million, respectively.

          A summary of the Employee Stock Purchase Plan activity and related information for the three years in the period ended December 31, 2009 is as follows:

	2009			2008			2007
Outstanding, beginning of year		250,868			179,603			171,481
Granted		219,184			194,832			128,928
Exercised		(9,803	)		(10,948	)		(9,947	)
Forfeited		(42,032	)		(38,325	)		(43,948	)
Expired		(82,609	)		(74,294	)		(66,911	)
Outstanding and exercisable, end of year		335,608			250,868			179,603
Weighted-average exercise price of:
Options outstanding, beginning of year	$	19.96		$	21.58		$	30.55
Options granted during the year	$	19.96		$	21.58		$	33.61
Options exercised during the year	$	15.43		$	21.24		$	26.11
Options forfeited during the year	$	16.87		$	21.02		$	26.38
Options expired during the year	$	12.74		$	20.20		$	23.61
Options outstanding, end of year	$	18.24		$	19.96		$	21.58
Weighted-average fair value of options granted during the year (calculated as of the grant date)	$	7.75		$	5.82		$	8.69
Intrinsic value of options exercised during the year	$	31,566		$	38,537		$	37,898
Intrinsic value of options outstanding and exercisable (calculated as of December 31)	$	1,080,658		$	883,055		$	684,287
Exercise prices of options outstanding (calculated as of December 31)	$	18.24		$	19.96		$	21.58
Weighted-average contractual life of outstanding options (calculated as of December 31, in years)		0.8			0.9			0.8

          The fair values for these options were estimated at the date of grant using a Black-Scholes options pricing model with the weighted-average assumptions for the options granted during the period noted in the following table. The risk-free interest rate was based on the U.S. Treasury constant maturity-nominal two-year rate whose maturity is nearest to the date of the expiration of the latest option outstanding and exercisable; the expected life of each option was estimated using the historical exercise behavior of employees; expected volatility was based on historical volatility of the Company’s stock; and expected forfeitures were based on historical forfeiture rates within the look-back period.

74

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	2009			2008			2007
Risk-free interest rates		0.76	%		3.05	%		4.82	%
Expected dividend yields		6.05	%		5.92	%		4.50	%
Expected life (in years)		1.50			1.43			1.59
Expected volatility		58.2	%		26.2	%		22.3	%
Expected forfeiture rates		84	%		82	%		79	%

13. Earnings Per Share

          The table below sets forth the computation of basic and diluted earnings per Common share for the three years in the period ended December 31, 2009.

	Year Ended December 31,
(Dollars in thousands, except per share data)	2009			2008			2007
Weighted average Common Shares
Weighted average Common Shares outstanding		59,385,018			52,846,988			48,595,003
Unvested restricted stock		(1,185,426	)		(1,299,709	)		(1,058,870	)
Weighted average Common Shares — Basic		58,199,592			51,547,279			47,536,133
Weighted average Common Shares — Basic		58,199,592			51,547,279			47,536,133
Dilutive effect of restricted stock		790,291			973,353			723,195
Dilutive effect of employee stock purchase plan		57,431			44,312			32,002
Weighted average Common Shares — Diluted		59,047,314			52,564,944			48,291,330
Net income
Income from continuing operations	$	28,221		$	18,198		$	11,043
Noncontrolling interests’ share in earnings		(57	)		(68	)		(18	)
Income from continuing operations attributable to common stockholders		28,164			18,130			11,025
Discontinued operations		22,927			23,562			49,037
Net income attributable to common stockholders	$	51,091		$	41,692		$	60,062
Basic Earnings Per Common Share
Income from continuing operations	$	0.48		$	0.35		$	0.23
Discontinued operations		0.40			0.46			1.03
Net income attributable to common stockholders	$	0.88		$	0.81		$	1.26
Diluted Earnings Per Common Share
Income from continuing operations	$	0.48		$	0.35		$	0.23
Discontinued operations		0.39			0.44			1.01
Net income attributable to common stockholders	$	0.87		$	0.79		$	1.24

14. Commitments and Contingencies

     Construction in Progress

          During 2009, three buildings located in Illinois and Texas that were previously under construction commenced operations. The Company is in the process of leasing these three buildings and anticipates an aggregate investment of approximately $88.0 million upon completion of tenant improvements.

          As of December 31, 2009, the Company had two medical office buildings under construction with estimated completion dates in the second quarter of 2010 and the third quarter of 2011. The table below details the Company’s construction in progress and land held for development at December 31, 2009. The information included in the table below represents management’s estimates and

75

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

expectations at December 31, 2009 which are subject to change. The Company’s disclosures regarding certain projections or estimates of completion dates and leasing may not reflect actual results.

	Estimated							CIP at		Estimated		Estimated
	Completion		Property			Approximate		Dec. 31,		Remaining		Total
State	Date		Type (1)	Properties		Square Feet		2009		Fundings		Investment
(Dollars in thousands)
Under construction:
Hawaii		2Q 2010	MOB		1		133,000	$	67,244	$	18,756	$	86,000
Washington		3Q 2011	MOB		1		206,000		10,514		81,686		92,200
Land held for development:
Texas									9,184
Texas									8,117
					2		339,000	$	95,059	$	100,442	$	178,200

(1) MOB-Medical office building

     Other Construction

          The Company had various first-generation tenant improvement budgeted amounts remaining as of December 31, 2009 of approximately $31.3 million related to properties that were developed by the Company.

     Operating Leases

          As of December 31, 2009, the Company was obligated under operating lease agreements consisting primarily of the Company’s corporate office lease and ground leases related to 42 real estate investments with expiration dates through 2101. The Company’s corporate office lease covers approximately 30,934 square feet of rented space and expires on October 31, 2010, with two five-year renewal options. Annual base rent on the corporate office lease increases approximately 3.25% annually and the Company’s ground leases generally increase annually based on increases in CPI. Rental expense relating to the operating leases for the years ended December 31, 2009, 2008 and 2007 was $3.8 million, $3.3 million and $3.0 million, respectively. The Company has prepaid certain of its ground leases which represented approximately $0.3 million, $0.2 million and $0.2 million, respectively, of the Company’s rental expense for the years ended December 31, 2009, 2008 and 2007. The Company’s future minimum lease payments for its operating leases, excluding leases that the Company has prepaid and leases in which an operator pays or fully reimburses the Company, as of December 31, 2009 were as follows (in thousands):

2010	$	4,107
2011		3,584
2012		3,599
2013		3,589
2014		3,646
2015 and thereafter		250,579
	$	269,104

     Legal Proceedings

          The Company is, from time to time, involved in litigation arising out of the ordinary course of business or which is expected to be covered by insurance. The Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on the Company’s consolidated financial condition or results or operations.

76

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

15. Other Data

     Taxable Income (unaudited)

          The Company has elected to be taxed as a REIT, as defined under the Internal Revenue Code of 1986, as amended. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its taxable income to its stockholders.

          As a REIT, the Company generally will not be subject to federal income tax on taxable income it distributes currently to its stockholders. Accordingly, no provision for federal income taxes has been made in the accompanying Consolidated Financial Statements. If the Company fails to qualify as a REIT for any taxable year, then it will be subject to federal income taxes at regular corporate rates, including any applicable alternative minimum tax, and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies as a REIT, it may be subject to certain state and local taxes on its income and property and to federal income and excise tax on its undistributed taxable income.

          Earnings and profits, the current and accumulated amounts of which determine the taxability of distributions to stockholders, vary from net income attributable to common stockholders and taxable income because of different depreciation recovery periods and methods, and other items.

          On a tax-basis, the Company’s gross real estate assets totaled approximately $2.1 billion and $2.0 billion, respectively, as of December 31, 2009 and 2008.

          The following table reconciles the Company’s consolidated net income attributable to common stockholders to taxable income for the three years ended December 31, 2009:

	Year Ended December 31,
(In thousands)	2009			2008			2007
Net income attributable to common stockholders	$	51,091		$	41,692		$	60,062
Reconciling items to taxable income:
Depreciation and amortization		17,196			12,667			13,733
Gain or loss on disposition of depreciable assets		8,549			(3,762	)		30,548
Straight-line rent		(1,623	)		528			(1,043	)
VIE consolidation		—			—			767
Receivable allowances		523			2,713			(4,625	)
Stock-based compensation		9,323			7,651			7,353
Other		(4,104	)		(5,206	)		7,062
		29,864			14,591			53,795
Taxable income (1)	$	80,955		$	56,283		$	113,857
Dividends paid	$	91,385		$	81,301		$	328,294

(1) Before REIT dividend paid deduction.

     Characterization of Distributions (unaudited)

          Distributions in excess of earnings and profits generally constitute a return of capital. The following table gives the characterization of the distributions on the Company’s common stock for the three years ended December 31, 2009. In 2007, the Company paid a one-time special dividend to its common stockholders of $4.75 per share from a portion of the proceeds from the sale of the senior living assets.

77

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

          For the three years ended December 31, 2009, there were no preferred shares outstanding. As such, no dividends were distributed related to preferred shares for those periods.

	2009					2008					2007
	Per Share		%			Per Share		%			Per Share		%
Common stock:
Ordinary income	$	0.90		58.7	%	$	1.05		68.4	%	$	1.11		16.3	%
Return of capital		0.16		10.1	%		0.41		26.5	%		4.44		64.9	%
Unrecaptured section 1250 gain		0.48		31.2	%		0.08		5.1	%		1.29		18.8	%
Common stock distributions	$	1.54		100.0	%	$	1.54		100.0	%	$	6.84		100.0	%

     State Income Taxes

          The Company must pay certain state income taxes, which are included in general and administrative expense on the Company’s Consolidated Statements of Income.

          In 2007, the state of Texas implemented a new gross margins tax on gross receipts from operations in Texas at 1%, less a 30% deduction for expenses. In 2008, the State of Michigan signed into law the Michigan Business Tax Act (“MBTA”), which replaced the Michigan single business tax with a combined business income tax and modified gross receipts tax. The enactment of the MBTA resulted in the creation of a deferred tax liability for the Company totaling $215,000 in 2007, and an additional $45,000 in 2009. The Company will record the Texas gross margins tax and the Michigan gross receipts tax as income tax expense.

          State income tax expense and state income tax payments for the three years ended December 31, 2009 are detailed in the table below:

(Dollars in thousands)	2009		2008		2007
State income tax expense:
Texas gross margins tax (1)	$	464	$	686	$	391
Michigan gross receipts deferred tax liability		45		—		215
Other		57		123		88
Total state income tax expense	$	566	$	809	$	694
State income tax payments, net of refunds and collections	$	674	$	612	$	137

(1) In the table above, income tax expense for 2009 and 2008 includes $0.1 million and $0.3 million, respectively, that was recorded to the gain on sale of real estate properties sold, which is included in discontinued operations rather than general and administrative expenses on the Company’s Consolidated Statements of Income.

16. Fair Value of Financial Instruments

          The carrying amounts of cash and cash equivalents, receivables and payables are a reasonable estimate of their fair value as of December 31, 2009 and 2008 due to their short-term nature. The fair value of notes and bonds payable is estimated using cash flow analyses as of December 31, 2009 and 2008, based on the Company’s current interest rates for similar types of borrowing arrangements. The fair value of the mortgage notes and notes receivable is estimated based either on cash flow analyses at an assumed market rate of interest or at a rate consistent with the rates on mortgage notes acquired by the Company or notes receivable entered into by the Company recently. The table below details the fair value and carrying values for notes and bonds payable, mortgage notes receivable and notes receivable at December 31, 2009 and 2008.

	December 31, 2009				December 31, 2008
	Carrying		Fair		Carrying		Fair
(Dollars in millions)	Value		Value		Value		Value
Notes and bonds payable	$	1,046.4	$	1,088.6	$	968.9	$	1,041.9
Mortgage notes receivable	$	31.0	$	30.8	$	59.0	$	58.8
Notes receivable, net of allowances	$	3.3	$	3.3	$	0.5	$	0.5

17. Retirement and Termination Benefits in 2007

          The Company recorded a $1.5 million charge in 2007, which is included in general and administrative expenses on the Company’s Consolidated Statement of Income relating to the retirement of the Company’s Chief Operating Officer and elimination of five other officer and employee positions in the Company’s corporate and regional offices.

78

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

18. Selected Quarterly Financial Data (unaudited)

          Quarterly financial information for the years ended December 31, 2009 and 2008 is summarized below. The results of operations have been restated, as applicable, to show the effect of reclassifying properties sold or to be sold as discontinued operations.

	Quarter Ended
(Dollars in thousands, except per share data)	March 31			June 30			September 30			December 31
2009
Revenues from continuing operations	$	62,093		$	64,311		$	63,236		$	63,664
Income from continuing operations	$	7,536		$	8,737		$	8,040		$	3,908
Discontinued operations		13,344			8,077			999			507
Net income		20,880			16,814			9,039			4,415
Less: (Income) loss from noncontrolling interests		(15	)		(62	)		65			(45	)
Net income atrributable to common stockholders	$	20,865		$	16,752		$	9,104		$	4,370
Basic earnings per common share
Income from continuing operations	$	0.13		$	0.15		$	0.14		$	0.07
Discontinued operations		0.23			0.14			0.02			—
Net income attributable to common stockholders	$	0.36		$	0.29		$	0.16		$	0.07
Diluted earnings per common share
Income from continuing operations	$	0.13		$	0.15		$	0.14		$	0.07
Discontinued operations		0.22			0.13			0.01			—
Net income attributable to common stockholders	$	0.35		$	0.28		$	0.15		$	0.07
2008
Revenues from continuing operations	$	51,289		$	51,806		$	53,839		$	56,997
Income from continuing operations	$	4,296		$	4,034		$	2,984		$	6,884
Discontinued operations		2,506			9,732			2,592			8,732
Net income		6,802			13,766			5,576			15,616
Less: Income from noncontrolling interests		(3	)		—			(49	)		(16	)
Net income atrributable to common stockholders	$	6,799		$	13,766		$	5,527		$	15,600
Basic earnings per common share
Income from continuing operations	$	0.09		$	0.08		$	0.06		$	0.12
Discontinued operations		0.05			0.20			0.05			0.15
Net income attributable to common stockholders	$	0.14		$	0.28		$	0.11		$	0.27
Diluted earnings per common share
Income from continuing operations	$	0.09		$	0.08		$	0.06		$	0.12
Discontinued operations		0.04			0.19			0.05			0.15
Net income attributable to common stockholders	$	0.13		$	0.27		$	0.11		$	0.27

79

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

          None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

          The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that the information required to be disclosed is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow for timely decisions regarding required disclosure.

          The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.

Changes in the Company’s Internal Control over Financial Reporting

          None.

Management’s Annual Report on Internal Control Over Financial Reporting

          The management of Healthcare Realty Trust Incorporated is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. The Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

          Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

          Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009 using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on that assessment, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2009. The Company’s independent registered public accounting firm, BDO Seidman, LLP, has also issued an attestation report on the effectiveness of the Company’s internal control over financial reporting included herein.

80

Report of
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
Healthcare Realty Trust Incorporated
Nashville, Tennessee

          We have audited Healthcare Realty Trust Incorporated’s internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Healthcare Realty Trust Incorporated’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

          We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

          A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

          Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

          In our opinion, Healthcare Realty Trust Incorporated maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the COSO criteria.

          We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Healthcare Realty Trust Incorporated as of December 31, 2009 and 2008 and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2009 and our report dated February 22, 2010 expressed an unqualified opinion thereon.

/s/ BDO Seidman, LLP  

Nashville, Tennessee
February 22, 2010

81

ITEM 9B. OTHER INFORMATION

     On February 22, 2010, the Company entered into a Controlled Equity Offering Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. to sell up to 5,000,000 shares of the Company’s common stock from time to time through an at-the-market equity offering program under which Cantor Fitzgerald acts as agent and/or principal. The Sales Agreement is subject to customary terms and conditions and supersedes the prior sales agreement with Cantor Fitzgerald dated December 31, 2008. The 5,000,000 shares includes 699,700 shares that remain unsold under the prior sales agreement and 4,300,300 new shares. On February 22, 2010, in connection with the proposed offering, the Company filed with the Securities and Exchange Commission (the “SEC”) a supplement to the prospectus contained in the Company’s effective Registration Statement on Form S-3 (Registration No. 333-150884) (the “Registration Statement”). A copy of the Sales Agreement and additional exhibits to the Registration Statement are filed with this Annual Report on Form 10-K and are incorporated herein by reference. The disclosure in this paragraph is not an offer to sell, nor a solicitation of an offer to buy securities, nor shall there be any sales of these securities in any state or jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state or jurisdiction. An offering, if any, will be made solely by means of a prospectus supplement and an accompanying prospectus under the Company’s automatic shelf registration statement on Form S-3 (Registration No. 333-150884).

82

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors

          Information with respect to directors, set forth in the Company’s Proxy Statement relating to the Annual Meeting of Stockholders to be held on May 18, 2010 under the caption “Election of Directors,” is incorporated herein by reference.

Executive Officers

     The executive officers of the Company are:

Name	Age		Position
David R. Emery		65	Chairman of the Board & Chief Executive Officer
Scott W. Holmes		55	Executive Vice President & Chief Financial Officer
John M. Bryant, Jr.		43	Executive Vice President & General Counsel
B. Douglas Whitman, II		41	Executive Vice President & Chief Operating Officer

          Mr. Emery formed the Company and has held his current positions since May 1992. Prior to 1992, Mr. Emery was engaged in the development and management of commercial real estate in Nashville, Tennessee. Mr. Emery has been active in the real estate industry for nearly 40 years.

          Mr. Holmes is a licensed CPA and has served as the Chief Financial Officer since January 1, 2003 and was the Senior Vice President — Financial Reporting (principal accounting officer) from October 1998 until January 1, 2003. Prior to joining the Company, Mr. Holmes was Vice President — Finance and Data Services at Trigon HealthCare, Inc., an insurance company located in Virginia. Mr. Holmes was with Ernst & Young LLP for more than 13 years and has considerable audit and financial reporting experience relating to public companies.

          Mr. Bryant became the Company’s General Counsel on November 1, 2003. From April 22, 2002 until November 1, 2003, Mr. Bryant was Vice President and Assistant General Counsel. Prior to joining the Company, Mr. Bryant was a shareholder with the law firm of Baker Donelson Bearman & Caldwell in Nashville, Tennessee.

          Mr. Whitman joined the Company in 1998 and has served as the Chief Operating Officer since March 1, 2007. As the Chief Operating Officer, he is responsible for overseeing property management and operations and the acquisition and development of medical office buildings and other outpatient medical facilities. Prior to joining the Company, Mr. Whitman worked for the University of Michigan Health System and HCA Inc.

Code of Ethics

          The Company has adopted a Code of Business Conduct and Ethics (the “Code of Ethics”) that applies to its principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions, as well as all directors, officers and employees of the Company. The Code of Ethics is posted on the Company’s website (www.healthcarerealty.com) and is available in print free of charge to any stockholder who requests a copy. Interested parties may address a written request for a printed copy of the Code of Ethics to: Investor Relations: Healthcare Realty Trust Incorporated, 3310 West End Avenue, Suite 700, Nashville, Tennessee 37203. The Company intends to satisfy the disclosure requirement regarding any amendment to, or a waiver of, a provision of the Code of Ethics for the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions by posting such information on the Company’s website.

Section 16(a) Compliance

          Information with respect to compliance with Section 16(a) of the Exchange Act, set forth in the Company’s Proxy Statement relating to the Annual Meeting of Stockholders to be held on May 18, 2010 under the caption “Security Ownership of Certain Beneficial Owners and Management — Section 16(a) Beneficial Ownership Reporting Compliance,” is incorporated herein by reference.

83

Stockholder Recommendation of Director Candidates

          There have been no material changes with respect to the Company’s policy relating to stockholder recommendations of director candidates. Such information is set forth in the Company’s Proxy Statement relating to the Annual Meeting of Stockholders to be held on May 18, 2010 under the caption “Shareholder Recommendation or Nomination of Director Candidates,” and is in corporated herein by reference.

Audit Committee

          Information relating to the Company’s Audit Committee, its members and the Audit Committee’s financial expert is set forth in the Company’s Proxy Statement relating to the Annual Meeting of Stockholders to be held on May 18, 2010 under the caption “Committee Membership,” and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

          Information relating to executive compensation, set forth in the Company’s Proxy Statement relating to the Annual Meeting of Stockholders to be held on May 18, 2010 under the captions “Compensation Discussion and Analysis,” “Executive Compensation,” “Compensation Committee Interlocks and Insider Participation,” “Compensation Committee Report” and “Director Compensation,” is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

          Information relating to the security ownership of management and certain beneficial owners, set forth in the Company’s Proxy Statement relating to the Annual Meeting of Stockholders to be held on May 18, 2010 under the caption “Security Ownership of Certain Beneficial Owners and Management,” is incorporated herein by reference.

          Information relating to securities authorized for issuance under the Company’s equity compensation plans, set forth in Item 5 of this report under the caption “Equity Compensation Plan Information,” is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

          Information relating to certain relationships and related transactions, and director independence, set forth in the Company’s Proxy Statement relating to the Annual Meeting of Stockholders to be held on May 18, 2010 under the captions “Certain Relationships and Related Transactions,” and “Corporate Governance — Independence of Directors,” are incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

          Information relating to the fees paid to the Company’s accountants, set forth in the Company’s Proxy Statement relating to the Annual Meeting of Stockholders to be held on May 18, 2010 under the caption “Ratification of Appointment of Independent Registered Public Accounting Firm,” is incorporated herein by reference.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

          (a) Index to Historical Financial Statements, Financial Statement Schedules and Exhibits

          (1) Financial Statements:

          The following financial statements of Healthcare Realty Trust Incorporated are incorporated herein by reference to Item 8 of this Annual Report on Form 10-K.

• Consolidated Balance Sheets — December 31, 2009 and 2008.

• Consolidated Statements of Income for the years ended December 31, 2009, December 31, 2008 and December 31, 2007.

• Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2009, December 31, 2008 and December 31, 2007.

• Consolidated Statements of Cash Flows for the years ended December 31, 2009, December 31, 2008 and December 31, 2007.

• Notes to Consolidated Financial Statements.

84

          (2) Financial Statement Schedules:

Schedule II	—	Valuation and Qualifying Accounts at December 31, 2009	91
Schedule III	—	Real Estate and Accumulated Depreciation at December 31, 2009	92
Schedule IV	—	Mortage Loans on Real Estate at December 31, 2009	93

          All other schedules are omitted because they are either not applicable, not required or because the information is included in the consolidated financial statements or notes thereto.

          (3) Exhibits:

Exhibit Index

Exhibit
Number		Description of Exhibits
1.1	—	Controlled Equity Offering Sales Agreement, dated as of February 22, 2010, between the Company and Cantor Fitzgerald & Co. (filed herewith)
1.2	—	Controlled Equity Offering Sales Agreement, dated as of December 31, 2008, between the Company and Cantor Fitzgerald & Co. This agreement was terminated on February 22, 2010 and superseded by Exhibit 1.1 hereto. (1)
1.3	—	Underwriting Agreement, dated as of December 1, 2009, by and among the Company and Banc of America Securities LLC and J.P. Morgan Securities Inc., as representatives of the several underwriters named herein. (2)
3.1	—	Second Articles of Amendment and Restatement of the Company. (3)
3.2	—	Amended and Restated Bylaws of the Company. (4)
4.1	—	Specimen stock certificate. (3)
4.2	—	Indenture, dated as of May 15, 2001, by and between the Company and Regions Bank, as trustee (as successor to the trustee named therein). (5)
4.3	—	First Supplemental Indenture, dated as of May 15, 2001, by the Company to HSBC Bank USA, National Association, as Trustee (formerly First Union National Bank, as Trustee). (5)
4.4	—	Form of 8.125% Senior Note Due 2011. (5)
4.5	—	Second Supplemental Indenture, dated as of March 30, 2004, by the Company to HSBC Bank USA, National Association, as Trustee (formerly Wachovia Bank, National Association, as Trustee). (6)
4.6	—	Form of 5.125% Senior Note Due 2014. (6)
4.7	—	Third Supplemental Indenture, dated December 4, 2009, by and between the Company and Regions Bank as trustee. (2)
4.8	—	Form of 6.50% Senior Note due 2017 (set forth in Exhibit B to the Third Supplemental Indenture filed as Exhibit 4.7 thereto). (2)
5	—	Opinion of Waller Lansden Dortch & Davis LLP. (filed herewith)
8	—	Tax opinion of Waller Lansden Dortch & Davis LLP. (filed herewith)
10.1	—	1995 Restricted Stock Plan for Non-Employee Directors of the Company. (7)
10.2	—	Amendment to 1995 Restricted Stock Plan for Non-Employee Directors of the Company. (1)
10.3	—	Second Amended and Restated Executive Retirement Plan. (1)
10.4	—	Amended and Restated Retirement Plan for Outside Directors. (1)
10.5	—	2000 Employee Stock Purchase Plan. (8)
10.6	—	Dividend Reinvestment Plan, as Amended. (9)
10.7	—	Amended and Restated Employment Agreement by and between David R. Emery and the Company. (10)
10.8	—	Employment Agreement by and between John M. Bryant, Jr. and the Company. (11)
10.9	—	Employment Agreement by and between Scott W. Holmes and the Company. (12)
10.10	—	Employment Agreement by and between B. Douglas Whitman, II and the Company. (13)
10.11	—	Amended and Restated Credit Agreement, dated as of September 30, 2009, by and among the Company, Bank of America, N.A., as Administrative Agent, and the other lenders named herein. (14)
10.12	—	2007 Employees Stock Incentive Plan. (15)
10.13	—	The Company’s Long-Term Incentive Program. (16)
10.14	—	Amendment, dated December 21, 2007, to 2007 Employees Stock Incentive Plan. (17)
10.15	—	Loan Application and Commitment Letter, dated as of July 20, 2009, by the Company and Teachers Insurance and Annuity Association of America (Charlotte properties) (filed herewith). (18)
10.16	—	Loan Application and Commitment Letter, dated as of July 20, 2009, by the Company and Teachers Insurance and Annuity Association of America (Nashville properties) (filed herewith). (18)

85

Exhibit
Number		Description of Exhibits
10.17	—	Loan Application and Commitment Letter, dated as of July 20, 2009, by the Company and Teachers Insurance and Annuity Association of America (Dallas properties). (filed herewith) (18)
11	—	Statement re: computation of per share earnings (contained in Note 13 to the Notes to the Consolidated Financial Statements for the year ended December 31, 2009 in Item 8 to this Annual Report on Form 10-K).
21	—	Subsidiaries of the Registrant. (filed herewith)
23.1	—	Consent of Waller Lansden Dortch & Davis, LLP. (included in Exhibit 5)
23.2	—	Consent of BDO Seidman, LLP, independent registered public accounting firm. (filed herewith)
31.1	—	Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)
31.2	—	Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)
32	—	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith)

(1)	Filed as an exhibit to the Company’s Form 8-K filed December 31, 2008 and hereby incorporated by reference.
(2)	Filed as an exhibit to the Company’s Form 8-K filed December 4, 2009 and hereby incorporated by reference.
(3)	Filed as an exhibit to the Company’s Registration Statement on Form S-11 (Registration No. 33-60506) previously filed pursuant to the Securities Act of 1933 and hereby incorporated by reference.
(4)	Filed as an exhibit to the Company’s Form 10-Q for the quarter ended September 30, 2007 and hereby incorporated by reference.
(5)	Filed as an exhibit to the Company’s Form 8-K filed May 17, 2001 and hereby incorporated by reference.
(6)	Filed as an exhibit to the Company’s Form 8-K filed March 29, 2004 and hereby incorporated by reference.
(7)	Filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 1995 and hereby incorporated by reference.
(8)	Filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 1999 and hereby incorporated by reference.
(9)	Filed as an exhibit to the Company’s Registration Statement on Form S-3 (Registration No. 33-79452) previously filed on September 26, 2003 pursuant to the Securities Act of 1933 and hereby incorporated by reference.
(10)	Filed as an exhibit to the Company’s Form 10-Q for the quarter ended September 30, 2004 and hereby incorporated by reference.
(11)	Filed as an exhibit to the Company’s Form 10-Q for the quarter ended September 30, 2003 and hereby incorporated by reference.
(12)	Filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 2002 and hereby incorporated by reference.
(13)	Filed as an exhibit to the Company’s Form 10-K filed March 1, 2007 and hereby incorporated by reference.
(14)	Filed as an exhibit to the Company’s Form 10-Q for the quarter ended September 30, 2009 and hereby incorporated by reference.
(15)	Filed as an exhibit to the Company’s Form 8-K filed May 21, 2007 and hereby incorporated by reference.
(16)	Filed as an exhibit to the Company’s Form 8-K filed December 14, 2007 and hereby incorporated by reference.
(17)	Filed as an exhibit to the Company’s Form 10-K for the year ended December 31, 2007 and hereby incorporated by reference.
(18)	Certain information has been omitted pursuant to a confidential treatment request filed with the Securities and Exchange Commission. The exhibit was originally filed as an exhibit to the Company’s Form 10-Q for the quarter ended September 30, 2009. The exhibit has been revised in response to comments received from the Securities and Exchange Commission.

Executive Compensation Plans and Arrangements

          The following is a list of all executive compensation plans and arrangements filed as exhibits to this Annual Report on Form 10-K:

1.	1995 Restricted Stock Plan for Non-Employee Directors of the Company (filed as Exhibit 10.1)
2.	Amendment to 1995 Restricted Stock Plan for Non-Employee Directors of the Company (filed as Exhibit 10.2)
3.	Second Amended and Restated Executive Retirement Plan (filed as Exhibit 10.3)
4.	Amended and Restated Retirement Plan for Outside Directors (filed as Exhibit 10.4)
5.	2000 Employee Stock Purchase Plan (filed as Exhibit 10.5)
6.	Amended and Restated Employment Agreement by and between David R. Emery and the Company (filed as Exhibit 10.7)
7.	Employment Agreement by and between John M. Bryant, Jr. and the Company (filed as Exhibit 10.8)
8.	Employment Agreement by and between Scott W. Holmes and the Company (filed as Exhibit 10.9)
9.	Employment Agreement by and between B. Douglas Whitman, II and the Company (filed as Exhibit 10.10)
10.	2007 Employees Stock Incentive Plan (filed as Exhibit 10.12)
11.	The Company’s Long-Term Incentive Program (filed as Exhibit 10.13)
12.	Amendment, dated December 21, 2007, to 2007 Employees Stock Incentive Plan (filed as Exhibit 10.14)

86

SIGNATURES

          Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Nashville, State of Tennessee, on February 22, 2010.

HEALTHCARE REALTY TRUST INCORPORATED
By:	/s/ David R. Emery
	David R. Emery
	Chairman of the Board and Chief Executive Officer

          Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Company and in the capacities and on the date indicated.

Signature	Title	Date
/s/ David R. Emery David R. Emery	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)	February 22, 2010
/s/ Scott W. Holmes Scott W. Holmes	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	February 22, 2010
/s/ David L. Travis David L. Travis	Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)	February 22, 2010
/s/ Errol L. Biggs, Ph.D.	Director	February 22, 2010
Errol L. Biggs, Ph.D.
/s/ Charles Raymond Fernandez, M.D.	Director	February 22, 2010
Charles Raymond Fernandez, M.D.
/s/ Batey M. Gresham, Jr.	Director	February 22, 2010
Batey M. Gresham, Jr.
/s/ Marliese E. Mooney	Director	February 22, 2010
Marliese E. Mooney
/s/ Edwin B. Morris, III	Director	February 22, 2010
Edwin B. Morris, III
/s/ John Knox Singleton	Director	February 22, 2010
John Knox Singleton
/s/ Bruce D. Sullivan	Director	February 22, 2010
Bruce D. Sullivan
/s/ Dan S. Wilford	Director	February 22, 2010
Dan S. Wilford

87

Schedule II — Valuation and Qualifying Accounts at December 31, 2009
(Dollars in thousands)

			Balance at		Additions				Uncollectible
			Beginning		Charged to Costs		Charged to Other		Accounts		Balance at End
Description			of Period		and Expenses		Accounts		Written-off		of Period
	2009	Accounts and notes receivable allowance	$	3,323	$	517	$	—	$	166	$	3,674
			$	3,323	$	517	$	—	$	166	$	3,674
	2008	Accounts and notes receivable allowance	$	1,499	$	1,904	$	—	$	80	$	3,323
		Preferred stock investment reserve		1,000		—		—		1,000		—
			$	2,499	$	1,904	$	—	$	1,080	$	3,323
	2007	Accounts and notes receivable allowance	$	2,522	$	986	$	—	$	2,009	$	1,499
		Preferred stock investment reserve		1,000		—		—		—		1,000
			$	3,522	$	986	$	—	$	2,009	$	2,499

88

Schedule III – Real Estate and Accumulated Depreciation at December 31, 2009

										Buildings, Improvements,
				Land						Lease Intangibles and CIP
						Cost						Cost
						Capitalized						Capitalized								(1) (4)
	Number of			Initial		Subsequent to				Initial		Subsequent to				Personal		(1) (3) (4)		Accumulated		(5)		Date
Property Type	Properties		State	Investment		Acquisition		Total		Investment		Acquisition		Total		Property		Total Assets		Depreciation		Encumbrances		Acquired		Date Constructed
Medical Office		135	AZ, CA, CO, DC, FL, GA, HI, IA, IL, IN, KS, LA, MD, MI, MO, MS, NC, NV, OR, SC, PA, TN, TX, VA, WA	$	89,604	$	1,674	$	91,278	$	1,402,292	$	153,576	$	1,555,868	$	1,747	$	1,648,893	$	274,057	$	130,927		1993-2009	1905 - 2009 2 Under Const. (2)
Physician Clinics		32	AL, AZ, CA, FL, GA, IA, IN, MA, TN, TX, VA		18,145		515		18,660		150,685		6,174		156,859		391		175,910		47,229		—		1993-2008		1968-2003
Ambulatory Care/Surgery		10	CA, FL, GA, IL, MO, NV, TX		17,243		434		17,677		75,123		7,740		82,863		104		100,644		32,237		13,868		1993-2001		1985-1998
Specialty Outpatient		5	AL, AR, FL, IA, VA		1,313		491		1,804		11,682		—		11,682		—		13,486		3,766		1,173		1998-2008		1986-2006
Specialty Inpatient		13	AL, AZ, CA, FL, IN, PA, TX		7,399		151		7,550		227,074		—		227,074		—		234,624		61,008		—		1994-2009		1983-2009
Other		10	AL, IN, MI, TN, VA		1,827		73		1,900		36,323		6,531		42,854		636		45,390		17,366		1,721		1993-2007		1967-1995
Total Real Estate		205			135,531		3,338		138,869		1,903,179		174,021		2,077,200		2,878		2,218,947		435,663		147,689
Land Held for Development		—			—		—		—		17,301		—		17,301		—		17,301		—		—
Corporate Property		—			—		—		—		—		—		—		14,631		14,631		6,668		—
Total Property		205		$	135,531	$	3,338	$	138,869	$	1,920,480	$	174,021	$	2,094,501	$	17,509	$	2,250,879	$	442,331	$	147,689

(1)	Includes six assets held for sale at December 31, 2009 of approximately $25.6 million (gross) and accumulated depreciation of $8.7 million; twelve assets at December 31, 2008 of $119.1 million (gross) and accumulated depreciation of $29.9 million; and six assets at December 31, 2007 of $25.9 million (gross) and accumulated depreciation of $10.5 million.
(2)	Development at December 31, 2009.
(3)	Total assets at December 31, 2009 have an estimated aggregate total cost of $2.1 billion for federal income tax purposes.
(4)	Depreciation is provided for on a straight-line basis on buildings and improvements over 3.0 to 39.0 years, lease intangibles over 1.3 to 93.0 years, personal property over 3.0 to 15.0 years, and land improvements over 9.5 to 15.0 years.
(5)	Includes discounts totaling $7.7 million as of December 31, 2009.
(6)	Reconciliation of Total Property and Accumulated Depreciation for the twelve months ended December 31, 2009, 2008 and 2007:

	Year to Date						Year to Date						Year to Date
	Ending 12/31/09 (1)						Ending 12/31/08 (1)						Ending 12/31/07 (1)
	Total			Accumulated			Total			Accumulated			Total			Accumulated
(Dollars in thousands)	Property			Depreciation			Property			Depreciation			Property			Depreciation
Beginning Balance	$	2,120,853		$	397,265		$	1,722,491		$	355,919		$	1,928,326		$	373,706
Additions during the period:
Real Estate		141,579			67,680			362,073			52,451			58,615			51,901
Corporate Property		284			784			320			651			765			184
Construction in Progress		85,120			—			74,085			—			74,955			—
Retirement/dispositions:
Real Estate		(96,954	)		(23,395	)		(38,103	)		(11,746	)		(339,060	)		(69,523	)
Corporate Property		(3	)		(3	)		(13	)		(10	)		(1,110	)		(349	)
Ending Balance	$	2,250,879		$	442,331		$	2,120,853		$	397,265		$	1,722,491		$	355,919

89

Schedule IV — Mortgage Loans on Real Estate at December 31, 2009
(Dollars in thousands)

						Periodic			Original
	Interest			Maturity		Payment			Face		Carrying
Description	Rate			Date		Terms			Amount		Amount		Balloon
Physician clinic facility located in California		8.30	%		05/12/2016		(1	)	$	14,920	$	14,920	$	13,895	(4)
Physician clinic facility located in Texas		8.50	%		09/01/2031		(2	)		1,986		1,898		—	(5)
Medical office building located in Iowa (construction loan)		6.23	%(7)		03/31/2010		(3	)		43,764		4,290		4,290	(6)
Medical office building located in Iowa		8.50	%		01/01/2011		(3	)		9,900		9,900		9,900	(6)
Total Mortgage Note Receivable											$	31,008

(1)	Interest only until May 12, 2011, then principal and interest amortized monthly based on a 25-year amortization schedule.
(2)	Paid in monthly installments of principal and interest. Fully amortized over 300 months.
(3)	Interest only until maturity. Principal payments may be made during term without penalty with remaining principal balance due at maturity.
(4)	Prepayment of all or part of the principal, with premium, may be made anytime after May 12, 2008. The balloon amount above represents the principal amount due at maturity.
(5)	Prepayment may be made at anytime after July 5, 2010.
(6)	Prepayment may be made at anytime.
(7)	Interest rate at December 31, 2009 based on LIBOR + 6.00%.
(8)	A rollforward of Mortgage loans on real estate for the three years ended December 31, 2009:

	Years Ended December 31,
(Dollars in thousands)	2009			2008			2007
Balance at beginning of period	$	59,001		$	30,117		$	73,856
Additions during period:
New or acquired mortgages		9,900			7,996			14,150
Increased funding on existing mortgages		10,616			28,974			—
		20,516			36,970			14,150
Deductions during period:
Scheduled principal payments		(26	)		(29	)		(84	)
Principal repayments and reductions (9)		(12,747	)		(8,057	)		(57,805	)
Principal reductions due to acquisitions (10)		(35,736	)		—			—
		(48,509	)		(8,086	)		(57,889	)
Balance at end of period	$	31,008		$	59,001		$	30,117

(9)

Principal repayments for the years ended December 31, 2009, 2008 and 2007 includes unscheduled principal reductions on mortgage notes of $0.1 million, $5.6 million and $0.9 million, respectively.

(10)

During 2009, a consolidated joint venture, in which the Company owns an 80% controlling interest, purchased three medical office buildings located in Iowa. The noncontrolling interest holder constructed the medical office buildings which were funded by the Company through a construction loan. Upon acquisition of the buildings by the joint venture, the construction loan was partially converted to additional equity investment in the joint venture by the Company with the amount remaining converting to a permanent mortgage note payable to the Company, which is eliminated in consolidation in the Company’s Consolidated Financial Statements.

90

EX-1.1

Exhibit 1.1

HEALTHCARE REALTY TRUST INCORPORATED

5,000,000 SHARES

CONTROLLED EQUITY OFFERING^SM

SALES AGREEMENT

February 22, 2010

CANTOR FITZGERALD & CO.
499 Park Avenue
New York, NY 10022

Ladies and Gentlemen:

     HEALTHCARE REALTY TRUST INCORPORATED, a Maryland corporation (the “Company”), confirms its agreement (this “Agreement”) with Cantor Fitzgerald & Co.(“CF&Co”), as follows:

     1. Issuance and Sale of Shares. The Company agrees that, from time to time during the term of this Agreement, on the terms and subject to the conditions set forth herein, it may issue and sell through CF&Co, acting as agent and/or principal, up to 5,000,000 shares (the “Shares”) of the Company’s common stock, par value $0.01 per share (the “Common Shares”). Notwithstanding anything to the contrary contained herein, the parties hereto agree that compliance with the limitation set forth in this Section 1 on the number of Shares issued and sold under this Agreement shall be the sole responsibility of the Company, and CF&Co shall have no obligation in connection with such compliance. The issuance and sale of Shares through CF&Co will be effected pursuant to the Registration Statement (as defined below) filed by the Company and declared effective by the Securities and Exchange Commission (the “Commission”), although nothing in this Agreement shall be construed as requiring the Company to use the Registration Statement to issue Shares.

     The Company and CF&Co are parties to that certain Sales Agreement dated December 31, 2008 (the “Prior Sales Agreement”). Immediately prior to the date hereof, there were 699,700 Common Shares available to be sold pursuant to the Prior Sales Agreement (the “Unused Shares”). The 5,000,000 Shares referenced above include up to 4,300,300 new Common Shares as well as the 699,700 Unused Shares. The Company and CF&Co hereby agree that upon execution of this Agreement the Prior Sales Agreement shall be terminated in accordance with Section 11(e) thereof.

     The Company has filed, in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations thereunder (collectively, the “Securities Act”), with the Commission an automatic shelf registration statement on Form S-3 (File No. 331-150884), including a base prospectus, relating to certain securities, including the Shares to be issued from time to time by the Company, and which incorporates by reference documents that the Company has filed or will file in accordance with the provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (collectively, the “Exchange Act”). The Company has prepared a prospectus supplement to the base prospectus included as part of such registration statement specifically relating to the Shares (the “Prospectus Supplement”). The Company will furnish to CF&Co, for use by CF&Co, copies of the prospectus included as part of such registration statement, as supplemented by the Prospectus Supplement. Except where the context otherwise requires, such registration statement, as declared effective by the Commission, including all documents filed as part thereof or incorporated by reference

therein, and including any information contained in a Prospectus (as defined below) subsequently filed with the Commission pursuant to Rule 424(b) under the Securities Act or deemed to be a part of such registration statement pursuant to Rule 430B or 462(b) of the Securities Act, is herein called the “Registration Statement.” The base prospectus, including all documents incorporated therein by reference, included in the Registration Statement, as it may be supplemented by the Prospectus Supplement, in the form in which such prospectus and/or Prospectus Supplement have most recently been filed by the Company with the Commission pursuant to Rule 424(b) under the Securities Act, together with any “issuer free writing prospectus” (a “Free Writing Prospectus”), as defined in Rule 433 of the Securities Act Regulations (“Rule 433”), relating to the shares that (i) is required to be filed with the Commission by the Company or (ii) is exempt from filing pursuant to Rule 433(d)(5)(i) in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g), is herein called the “Prospectus.” Any reference herein to the Registration Statement, the Prospectus or any amendment or supplement thereto shall be deemed to refer to and include the documents incorporated by reference therein, and any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement or the Prospectus shall be deemed to refer to and include the filing after the execution hereof of any document with the Commission deemed to be incorporated by reference therein. For purposes of this Agreement, all references to the Registration Statement, the Prospectus or to any amendment or supplement thereto shall be deemed to include any copy filed with the Commission pursuant to its Electronic Data Gathering Analysis and Retrieval System (“EDGAR”).

     2. Placements. Each time that the Company wishes to issue and sell all or a portion of the Shares hereunder (each, a “Placement”), it will notify CF&Co by e-mail notice in the form attached hereto as Schedule 1 (or other method mutually agreed to in writing by the parties) containing the parameters in accordance with which it desires the Shares to be sold, which shall at a minimum include the number of Shares to be issued (the “Placement Shares”), the time period during which sales are requested to be made, any limitation on the number of Shares that may be sold in any one day and any minimum price below which sales may not be made (a “Placement Notice”). The Placement Notice shall originate from any of the individual representatives of the Company set forth on Schedule 2 (with a copy to each of the other individual representatives of the Company listed on such schedule), and shall be addressed to each of the individual representatives of CF&Co set forth on Schedule 2, as such Schedule 2 may be amended from time to time. The Placement Notice shall be effective upon receipt by CF&Co unless and until (i) in accordance with the notice requirements set forth in Section 4, CF&Co declines to accept the terms contained therein for any reason, in its sole discretion, (ii) the entire amount of the Placement Shares have been sold, (iii) in accordance with the notice requirements set forth in Section 4, the Company suspends or terminates the Placement Notice, (iv) the Company issues a subsequent Placement Notice with parameters superseding those on the earlier dated Placement Notice, or (v) this Agreement has been terminated pursuant to the provisions of Section 11. The amount of any discount, commission or other compensation to be paid by the Company to CF&Co in connection with the sale of the Placement Shares shall be calculated in accordance with the terms set forth in Schedule 3. It is expressly acknowledged and agreed that neither the Company nor CF&Co will have any obligation whatsoever with respect to a Placement of any Placement Shares unless and until the Company delivers a Placement Notice to CF&Co and CF&Co does not decline such Placement Notice pursuant to the terms set forth above, and then only upon the terms specified therein and herein. In the event of a conflict between the terms of this Agreement and the terms of a Placement Notice, the terms of the Placement Notice will control.

     3. Sale of Placement Shares by CF&Co. Subject to the terms and conditions herein set forth, upon the Company’s issuance of a Placement Notice, and unless the sale of the Placement Shares described

2

therein has been declined, suspended, or otherwise terminated in accordance with the terms of this Agreement, CF&Co, for the period specified in the Placement Notice, will use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of the New York Stock Exchange (the “Exchange”), to sell such Placement Shares in accordance with the terms of such Placement Notice. CF&Co will provide written confirmation to the Company no later than the opening of the Trading Day (as defined below) immediately following the Trading Day on which it has made sales of Placement Shares hereunder setting forth the number of Placement Shares sold on such day, the compensation payable by the Company to CF&Co pursuant to Section 2 with respect to such sales, and the Net Proceeds (as defined below) payable to the Company, with an itemization of the deductions made by CF&Co (as set forth in Section 5(a)) from the gross proceeds that it receives from such sales. After consultation to the Company and subject to the terms of the Placement Notice, CF&Co may sell Placement Shares by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act, including without limitation sales made directly on the Exchange, on any other existing trading market for the Common Shares or to or through a market maker. After consultation with the Company and subject to the terms of the Placement Notice, CF&Co may also sell Placement Shares in privately negotiated transactions. The Company acknowledges and agrees that (i) there can be no assurance that CF&Co will be successful in selling Placement Shares, and (ii) CF&Co will incur no liability or obligation to the Company or any other person or entity if it does not sell Placement Shares for any reason other than a failure by CF&Co to use its commercially reasonable efforts consistent with its normal trading and sales practices to sell such Placement Shares as required under this Section 3. For the purposes hereof, “Trading Day” means any day on which Common Shares are purchased and sold on the principal market on which the Common Shares are listed or quoted.

     4. Suspension of Sales. The Company or CF&Co may, upon notice to the other party in writing (including by e-mail correspondence to each of the individuals of the other party set forth on Schedule 2, if receipt of such correspondence is actually acknowledged by any of the individuals to whom the notice is sent, other than via auto-reply) or by telephone (confirmed immediately by verifiable facsimile transmission or e-mail correspondence to each of the individuals of the other party set forth on Schedule 2), suspend any sale of Placement Shares; provided, however, that such suspension shall not affect or impair either party’s obligations with respect to any Placement Shares sold hereunder prior to the receipt of such notice. Each of the parties agrees that no such notice under this Section 4 shall be effective against the other unless it is made to one of the individuals named on Schedule 2 hereto, as such Schedule may be amended from time to time.

     5. Settlement.

          (a) Settlement of Placement Shares. Unless otherwise specified in the applicable Placement Notice, settlement for sales of Placement Shares will occur on the third (3^rd) Trading Day (or such earlier day as is industry practice for regular-way trading) following the date on which such sales are made (each, a “Settlement Date”). The amount of proceeds to be delivered to the Company on a Settlement Date against receipt of the Placement Shares sold (the “Net Proceeds”) will be equal to the aggregate sales price received by CF&Co for such Placement Shares, after deduction for (i) CF&Co’s commission, discount or other compensation for such sales payable by the Company pursuant to Section 2 hereof, (ii) any other amounts due and payable by the Company to CF&Co hereunder pursuant to Section 7(h) (Expenses) hereof, and (iii) any transaction fees imposed by any governmental or self-regulatory organization in respect of such sales.

          (b) Delivery of Placement Shares. On or before each Settlement Date, the Company will, or will cause its transfer agent to, electronically transfer the Placement Shares being sold by crediting CF&Co’s

3

or its designee’s account (provided CF&Co shall have given the Company written notice of such designee prior to the Settlement Date) at The Depository Trust Company through its Deposit and Withdrawal at Custodian System or by such other means of delivery as may be mutually agreed upon by the parties hereto which in all cases shall be freely tradeable, transferable, registered shares in good deliverable form. On each Settlement Date, CF&Co will deliver the related Net Proceeds in same day funds to an account designated by the Company on, or prior to, the Settlement Date. The Company agrees that if the Company, or its transfer agent (if applicable), defaults in its obligation to deliver Placement Shares on a Settlement Date, in addition to and in no way limiting the rights and obligations set forth in Section 9(a) (Indemnification and Contribution) hereto, it will (i) hold CF&Co harmless against any loss, claim, damage, or expense (including reasonable legal fees and expenses), as incurred, arising out of or in connection with such default by the Company and (ii) pay to CF&Co any commission, discount, or other compensation to which it would otherwise have been entitled absent such default; provided, however, that the Company shall not be obligated to so indemnify and reimburse CF&Co if the Placement Shares are not delivered due to (i) a suspension or material limitation in trading in securities generally on the Exchange, the American Stock Exchange or the NASDAQ; (ii) a general moratorium on commercial banking activities declared by either federal or New York State authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States; (iii) an outbreak or escalation of hostilities or acts of terrorism involving the United States or a declaration by the United States of a national emergency or war; or (iv) any other calamity or crisis or any change in financial, political or economic conditions in the United States or elsewhere.

     6. Representations and Warranties of the Company. The Company represents and warrants to, and agrees with, CF&Co that as of (i) the date of this Agreement, (ii) each Representation Date (as defined in Section 7(n) below) on which a certificate is required to be delivered pursuant to Section 7(n) of this Agreement, and (iii) the date on which any Placement Notice is given hereunder, as the case may be:

          (a) The Company satisfies all of the requirements of the Securities Act for use of Form S-3 for the offering of the Shares contemplated hereby. At the time of the initial filing of the Registration Statement, at the time of the most recent amendment thereto for the purposes of complying with Section 10(a)(3) of the Securities Act (whether such amendment was by post-effective amendment, incorporated report filed pursuant to Section 13 or 15(d) of the Exchange Act or form of prospectus), at the time the Company or any person acting on its behalf (within the meaning, for this clause only, of Rule 163(c) of the Securities Act) made any offer relating to the Shares in reliance on the exemption of Rule 163 of the Securities Act and at the date hereof, the Company was and is a “well-known seasoned issuer” as defined in Rule 405 of the Securities Act, including not having been and not being an “ineligible issuer,” as defined in Rule 405 of the Securities Act. The Registration Statement is an “automatic shelf registration statement,” as defined in Rule 405 of the Securities Act, and the Shares, since their registration on the Registration Statement, have been and remain eligible for registration by the Company on a Rule 405 “automatic shelf registration statement.” The Company has not received from the Commission any notice pursuant to Rule 401(g)(2) of the Securities Act objecting to the use of the automatic shelf registration statement form. The Company has paid or will pay the required Commission filing fees relating to the Shares within the time required by Rule 456(b)(1)(i) of the Securities Act without regard to the proviso therein and otherwise in accordance with Rules 456(b) and 457(r) of the Securities Act (including, if applicable, by updating the “Calculation of Registration Fee” table in accordance with Rule 456(b)(1)(ii) of the Securities Act either in a post-effective amendment to the Registration Statement or on the cover page of the Prospectus).

          (b) The Registration Statement became effective upon filing under Rule 462(e) of the Securities Act on May 13, 2008. No stop order suspending the effectiveness of the Registration Statement has

4

been issued under the Securities Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated by the Commission, and any request on the part of the Commission for additional information has been complied with.

          (c) Any offer that is a written communication relating to the Shares made prior to the initial filing of the Registration Statement by the Company or any person acting on its behalf (within the meaning, for this paragraph only, of Rule 163(c) of the Securities Act) has been filed with the Commission in accordance with the exemption provided by Rule 163 of the Securities Act and otherwise complied with the requirements of Rule 163 of the Securities Act, including without limitation the legending requirement.

          (d) The Company has delivered to CF&Co one complete copy of the Registration Statement and a copy of each consent and certificate of experts filed as a part thereof, and conformed copies of the Registration Statement (without exhibits) and the Prospectus, as amended or supplemented, in such quantities and at such places as CF&Co has reasonably requested. The Prospectus delivered to CF&Co for use in connection with the offering of Shares will, at the time of such delivery, be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

          (e) At the respective times the Registration Statement and each amendment thereto became effective, at each deemed effective date with respect to CF&Co pursuant to Rule 430B(f)(2) of the Securities Act, as the case may be, the Registration Statement complied and will comply in all material respects with the requirements of the Securities Act, and did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The preceding sentence does not apply to statements in or omissions from the Registration Statement or any amendment thereto in reliance upon and in conformity with written information relating to CF&Co furnished to the Company in writing by CF&Co expressly for inclusion in any of the aforementioned documents.

          (f) Neither the Prospectus nor any amendments or supplements thereto, at the time the Prospectus or any such amendment or supplement was issued, as of the date hereof, and at each Representation Date, as the case may be, included or will include an untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from the Prospectus, as amended or supplemented, in reliance upon and in conformity with written information relating to CF&Co furnished to the Company in writing by CF&Co expressly for inclusion in any of the aforementioned documents.

          (g) Each document incorporated by reference in the Registration Statement or the Prospectus heretofore filed, when it was filed (or, if any amendment with respect to any such document was filed, when such amendment was filed), conformed in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder, and any further documents so filed and incorporated after the date of this Agreement will, when they are filed, conform in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder; no such document when it was filed (or, if an amendment with respect to any such document was filed, when such amendment was filed), contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading; and no such document, when it is filed, will contain an untrue statement of a material fact or will omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading.

5

          (h) Each issuer Free Writing Prospectus, on its issue date, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement or the Prospectus, including any incorporated document deemed to be a part thereof that has not been superseded or modified. The foregoing sentence does not apply to statements in or omissions from any issuer Free Writing Prospectus based upon and in conformity with written information furnished to the Company by CF&Co specifically for use therein.

          (i) This Agreement has been duly authorized, executed and delivered by the Company and this Agreement constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally and by general principles of equity (the “Exceptions”).

          (j) The Company and its “Subsidiaries” (as defined in Section 6(m) hereof) have been duly incorporated or organized and are validly existing as corporations or organizations in good standing under the laws of the states or other jurisdictions in which they are incorporated or organized, with full power and authority (corporate and other) to own, lease and operate their properties and conduct their businesses as described in the Prospectus and, with respect to the Company, to execute and deliver, and perform the Company’s obligations under, this Agreement; the Company and its Subsidiaries are duly qualified to do business as foreign corporations or organizations in good standing in each state or other jurisdiction in which their ownership or leasing of property or conduct of business legally requires such qualification, except where the failure to be so qualified, individually or in the aggregate, would not have a Material Adverse Effect. The term “Material Adverse Effect” as used herein means any material adverse effect on the condition (financial or other), net worth, business, affairs, management, prospects, results of operations or cash flow of the Company and its Subsidiaries, taken as a whole.

          (k) Neither the Company nor any of its Subsidiaries has sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree otherwise than as set forth in the Prospectus or as disclosed in writing to CF&Co prior to execution and delivery of this Agreement and, since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any change in the capital stock or long-term debt of the Company or any of its Subsidiaries which would give rise to a Material Adverse Effect, or any development involving a prospective Material Adverse Effect, in or affecting the general affairs, management, financial position, stockholders’ equity or results of operations of the Company and its Subsidiaries taken as a whole, otherwise than as set forth in the Prospectus.

          (l) The issuance and sale of the Shares pursuant to this Agreement and the execution, delivery and performance by the Company of this Agreement, and the consummation of the transactions herein or therein contemplated, will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any properties or assets of the Company or any of its Subsidiaries under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its Subsidiaries is a party, or by which the Company or any of its Subsidiaries is bound, or to which any of the properties or assets of the Company or any of its Subsidiaries is subject, or violate any statute, rule, regulation or other law, or any order or judgment, of any court or governmental agency or body having jurisdiction over the Company or any of its Subsidiaries or any of their properties, except to such extent as, individually or in the aggregate, does not have a Material Adverse Effect, nor will such action result in any violation of the provisions of the Company’s articles

6

of incorporation or bylaws; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the execution, delivery and performance of this Agreement, the issuance and sale of the Shares pursuant to this Agreement or the consummation of the transactions contemplated hereby, except such as have been, or will be prior to the applicable Settlement Date, obtained under the Securities Act or as may be required by the Exchange and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or blue sky laws in connection with the purchase and distribution of the Shares by CF&Co.

          (m) The Company has duly and validly authorized capital stock as set forth in the Prospectus; all outstanding Common Shares of the Company conform, and when issued the shares will conform, to the description thereof in the Prospectus and, when issued and paid for in the manner described herein will be, duly authorized, validly issued, fully paid and non-assessable; and the issuance of the Shares to be purchased from the Company hereunder is not subject to preemptive or other similar rights, or any restriction upon the voting or transfer thereof (except for those rights and restrictions relating primarily to the Company’s status as a REIT as described in Section 6(cc) hereof) pursuant to applicable law or the Company’s articles of incorporation or by-laws or any agreement to which the Company or any of its Subsidiaries is a party or by which any of them may be bound. All corporate action required to be taken by the Company for the authorization, issuance and sale of the Shares has been duly and validly taken prior to the date of this Agreement. Except as disclosed in the Prospectus, there are no outstanding subscriptions, rights, warrants, options, calls, convertible securities, commitments of sale or rights related to or entitling any person to purchase or otherwise to acquire any shares of, or any security convertible into or exchangeable or exercisable for, the capital stock of, or other ownership interest in, the Company. The Company has no subsidiaries (collectively, “Subsidiaries”) other than those identified in Exhibit 21 to the Company’s last filed Annual Report on Form 10-K or as otherwise disclosed in writing to CF&Co (“Exhibit 21”). The Company owns all of the outstanding capital stock of or other equity interests in each such subsidiary except as set forth in Exhibit 21 or as otherwise disclosed in writing to CF&Co. Other than the Subsidiaries referred to above, the Company does not own, directly or indirectly, any shares of stock or any other equity or long-term debt of any other corporation or have any direct or indirect equity interest or ownership of long-term debt in any firm, partnership, joint venture, limited liability company, association or other entity, except as described in the Prospectus. The outstanding shares of capital stock of or other equity interests in the Company’s Subsidiaries have been duly authorized and validly issued, are fully paid and non-assessable and, except as otherwise set forth in Exhibit 21, are owned, directly or indirectly, by the Company free and clear of any mortgage, pledge, lien, encumbrance, charge or adverse claim and are not the subject of any agreement or understanding with any person and were not issued in violation of any preemptive or similar rights; and there are no outstanding subscriptions, rights, warrants, options, calls, convertible securities, commitments of sale or instruments related to or entitling any person to purchase or otherwise acquire any shares of, or any security convertible into or exchangeable or exercisable for, the capital stock of, or other ownership interest in any of the Subsidiaries.

          (n) The statements set forth in the Prospectus, as of its date of issue, describing the Shares and this Agreement, insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate, complete and fair in all material respects.

          (o) Each of the Company and its Subsidiaries is in possession of and is operating in compliance with all franchises, grants, authorizations, licenses, certificates, permits, easements, consents, orders and approvals (“Permits”) from all state, federal, foreign and other regulatory authorities, and has satisfied the requirements imposed by regulatory bodies, administrative agencies or other governmental bodies,

7

agencies or officials, that are required for the Company and its Subsidiaries lawfully to own, lease and operate their properties and conduct their businesses as described in the Prospectus, in each case with such exceptions, individually or in the aggregate, as would not have a Material Adverse Effect; and, each of the Company and its Subsidiaries is conducting its business in compliance with all of the laws, rules and regulations of each jurisdiction in which it conducts its business, in each case with such exceptions, individually or in the aggregate, as would not have a Material Adverse Effect; each of the Company and its Subsidiaries has filed all notices, reports, documents or other information (“Notices”) required to be filed under applicable laws, rules and regulations, in each case, with such exceptions, individually or in the aggregate, as would not have a Material Adverse Effect; and, except as otherwise specifically described in the Prospectus, neither the Company nor any of its Subsidiaries has received any notification from any court or governmental body, authority or agency, relating to the revocation or modification of any such Permit or, to the effect that any additional authorization, approval, order, consent, license, certificate, permit, registration or qualification (“Approvals”) from such regulatory authority is needed to be obtained by any of them, in any case where it could be reasonably expected that obtaining such Approvals or the failure to obtain such Approvals, individually or in the aggregate, would have a Material Adverse Effect.

          (p) All United States federal income tax returns of the Company and its Subsidiaries required by law to be filed have been filed and all taxes shown by such returns or otherwise assessed, which are due and payable, have been paid, except assessments against which appeals have been or will be promptly taken and as to which adequate reserves have been provided. The Company and its Subsidiaries have filed all other tax returns that are required to have been filed by them pursuant to applicable foreign, state, local or other law, except insofar as the failure to file such returns, individually or in the aggregate, would not result in a Material Adverse Effect, and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company or any Subsidiary except for such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of any income and corporation tax liability for any years not finally determined are adequate to meet any assessments or re-assessments for additional income tax for any years not finally determined.

          (q) The Company and its Subsidiaries own or possess, or can acquire on reasonable terms, all licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names, patents and patent rights (collectively “Intellectual Property”) material to carrying on their businesses as described in the Prospectus, and neither the Company nor any of its Subsidiaries has received any correspondence relating to any Intellectual Property or notice of infringement of or conflict with asserted rights of others with respect to any Intellectual Property which would render any Intellectual Property invalid or inadequate to protect the interest of the Company and its Subsidiaries and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, individually or in the aggregate, would have or may reasonably be expected to have a Material Adverse Effect.

          (r) Except in each case such as would not have a Material Adverse Effect, the Company and its Subsidiaries have good and marketable title in fee simple or valid, enforceable leasehold title to all items of real property and good and marketable title to all personal property owned by them or disclosed as owned by them in the Prospectus, in each case free and clear of all liens, encumbrances, restrictions and defects except such as are described in the Prospectus or do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property; and any property held under lease or sublease by the Company or any of its Subsidiaries is held under valid, duly authorized, subsisting and enforceable leases or subleases with such exceptions as are not material and

8

do not interfere with the use made and proposed to be made of such property by the Company and its Subsidiaries; the Company and its Subsidiaries have title insurance on all real properties described in the Prospectus as having been financed by them pursuant to a mortgage loan in an amount at least equal to the aggregate principal amount of each such mortgage loan or in an amount at least equal to the aggregate acquisition price paid by the Company or its Subsidiaries for such properties and the cost of construction of the improvements located on such properties; and neither the Company nor any of its Subsidiaries has any notice or knowledge of any material claim of any sort which has been, or may be, asserted by anyone adverse to the Company’s or any of its Subsidiaries rights as lessee or sublessee under any lease or sublease described above, or affecting or questioning the Company’s or any of its Subsidiaries’ rights to the continued possession of the leased or subleased premises under any such lease or sublease in conflict with the terms thereof. To the knowledge of the Company, no lessee of any portion of any of the properties described in the Prospectus is in default under its respective lease and there is no event which, but for the passage of time or the giving of notice or both, would constitute a default under any such lease, except such defaults that would, individually or in the aggregate, not have a Material Adverse Effect.

          (s) No labor disturbance exists with the employees of the Company or any of its Subsidiaries or, to the Company’s knowledge, is imminent which, individually or in the aggregate, would have a Material Adverse Effect. None of the employees of the Company or any of its Subsidiaries is represented by a union and, to the knowledge of the Company and its Subsidiaries, no union organizing activities are taking place. Neither the Company nor any of its Subsidiaries has violated any federal, state or local law or foreign law relating to discrimination in hiring, promotion or pay of employees, nor any applicable wage or hour laws, or the rules and regulations thereunder, or analogous foreign laws and regulations, which might, individually or in the aggregate, result in a Material Adverse Effect.

          (t) The Company and its Subsidiaries are in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder (“ERISA”); no “reportable event” (as defined in ERISA) has occurred with respect to any “pension plan” (as defined in ERISA) for which the Company and its Subsidiaries would have any liability; the Company and its Subsidiaries have not incurred and do not expect to incur liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “pension plan” or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the “Code”); and each “pension plan” for which the Company or any of its Subsidiaries would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects, and, to the Company’s knowledge, nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification.

          (u) The Company and its Subsidiaries maintain insurance of the types and in the amounts generally deemed adequate for its business, including, but not limited to, directors’ and officers’ insurance, insurance covering real and personal property owned or leased by the Company and its Subsidiaries against theft, damage, destruction, acts of vandalism and all other risks customarily insured against, all of which insurance is in full force and effect. Neither the Company nor any of its Subsidiaries has been refused any insurance coverage sought or applied for, and the Company has no reason to believe that it and its Subsidiaries will not be able to renew their existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.

          (v) Neither the Company nor any of its Subsidiaries is, or with the giving of notice or lapse of time or both would be, in default or violation with respect to its articles of incorporation or by-laws.

9

Neither the Company nor any of its Subsidiaries is, or with the giving of notice or lapse of time or both would be, in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or to which any of the properties or assets of the Company or any of its Subsidiaries is subject, or in violation of any statutes, laws, ordinances or governmental rules or regulations or any orders or decrees to which it is subject, including, without limitation, Section 13 of the 1934 Act, which default or violation, individually or in the aggregate, would have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries has, at any time during the past five years, (A) made any unlawful contributions to any candidate for any political office, or failed fully to disclose any contribution in violation of law, or (B) made any payment to any state, federal or foreign government official, or other person charged with similar public or quasi-public duty (other than any such payment required or permitted by applicable law).

          (w) Other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its Subsidiaries is a party or of which any property of the Company or any of its Subsidiaries is the subject, or to the Company’s knowledge, any person from whom the Company or any of its Subsidiaries acquired any of such property, or any lessee, sublessee or operator of any such property or portion thereof is a party, that, if determined adversely to the Company or any of its Subsidiaries, would individually or in the aggregate have a Material Adverse Effect or which would materially and adversely affect the consummation of the transactions contemplated hereby or which is required to be disclosed in the Registration Statement or the Prospectus; to the Company’s knowledge, no such proceedings are threatened or contemplated. Neither the Company nor any of its Subsidiaries has, nor, to the Company’s knowledge, any seller, lessee, sublessee or operator of any such properties, or portion thereof or any previous owner thereof has, received from any governmental authority notice of any material violation of any municipal, state or federal law, rule or regulation (including without limitation any such law, rule or regulation applicable to the health care industry) and including foreign, federal, state or local law or regulation relating to human health or safety or the environment or hazardous substances or materials concerning such properties, or any part thereof which has heretofore been cured, and neither the Company nor any of its Subsidiaries knows of any such violation, or any factual basis, occurrence or circumstance that would give rise to a claim under or pursuant to any such laws, rules or regulations which would, in any of the cases set forth in the sentence, individually or in the aggregate, have a Material Adverse Effect. Except as described in the Prospectus, none of the property owned or leased by the Company or any of its Subsidiaries is, to the knowledge of the Company, contaminated with any waste or hazardous substances, and neither the Company nor any of its Subsidiaries may be deemed an “owner or operator” of a “facility” or “vessel” which owns, possesses, transports, generates or disposes of a “hazardous substance” as those terms are defined in §9601 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §9601 et seq., except to the extent that it would not have a Material Adverse Effect or a material adverse effect on any Material Subsidiary. Neither the Company nor any of its Subsidiaries, nor, to the Company’s knowledge, any seller, lessee, sublessee or operator of any such property, or portion thereof has, received from any governmental authority any written notice of any condemnation of or zoning change affecting such properties, or any part thereof that would have a Material Adverse Effect, or a material adverse effect on any Material Subsidiary and the Company does not know of any such condemnation or zoning change which is threatened and which if consummated would have a Material Adverse Effect, or a material adverse effect on any Material Subsidiary. No contract or document of a character required to be described in the Registration Statement, the Prospectus or any document

10

incorporated by reference therein or to be filed as an exhibit to the Registration Statement or any document incorporated therein is not so described, filed or incorporated by reference as required.

          (x) The Company is not and, after giving effect to the offering and sale of the Shares, will not be an “investment company” or an entity “controlled” by an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended (the “1940 Act”).

          (y) The accounting firm which has audited the financial statements filed with or incorporated by reference in and as a part of the Registration Statement, is an independent registered public accounting firm within the meaning of the Securities Act and the Exchange Act. The consolidated financial statements and schedules of the Company, including the notes thereto, filed with or incorporated by reference and as a part of the Registration Statement or the Prospectus, are accurate in all material respects and present fairly in all material respects the financial condition of the Company and its Subsidiaries as of the respective dates thereof and the consolidated results of operations and changes in financial position and consolidated statements of cash flow for the respective periods covered thereby, all in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved except as otherwise disclosed therein. All adjustments necessary for a fair presentation of results for such periods have been made. The selected financial data included or incorporated by reference in the Registration Statement and Prospectus present fairly in all material respects the information shown therein and have been compiled on a basis consistent with that of the audited financial statements. Any operating or other statistical data included or incorporated by reference in the Registration Statement and Prospectus comply in all material respects with the Securities Act and the Exchange Act and present fairly in all material respects the information shown therein. The pro forma financial statements and the related notes thereto included in or incorporated by reference in the Registration Statement and Prospectus present fairly, in all material respects, the information shown therein, have been prepared in accordance with the SEC’s rules and guidelines with respect to pro forma financial statements and have been properly compiled on the bases described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein.

          (z) Except as disclosed in the Prospectus, no holder of any security of the Company has any right to require registration of the Shares or any other security of the Company because of the filing of the Registration Statement or the consummation of the transactions contemplated hereby. No person has the right, contractual or otherwise, to cause the Company to permit such person to underwrite the sale of any of the Shares. Except for this Agreement there are no contracts, agreements or understandings between the Company or any of its Subsidiaries and any person that would give rise to a valid claim against the Company, its Subsidiaries or CF&Co for a brokerage commission, finder’s fee or like payment in connection with the issuance, purchase and sale of the Shares pursuant to this Agreement.

          (aa) The Company has not distributed and, prior to completion of the distribution of the Shares, will not distribute any offering material in connection with the offering and sale of the Shares other than the Registration Statement, the Prospectus Supplement, any Issuer Free Writing Prospectus or the Prospectus relating to such issuance.

          (bb) The Company has not taken and will not take, directly or indirectly, any action designed to or which might reasonably be expected to cause or result in stabilization or manipulation of the price of the Company’s Common Stock, and the Company is not aware of any such action taken or to be taken by affiliates of the Company.

          (cc) (i) The Company is organized and operates in conformity with the requirements for qualification as a real estate investment trust (“REIT”) under Sections 856 and 857 of the Code, (ii) the

11

Company qualified as a REIT for all taxable years prior to 2010, and (iii) the Company’s current method of operation will enable it to meet the requirements for taxation as a REIT under the Code for 2010, and the Company intends to qualify as a REIT for all subsequent years.

          (dd) Except as described in the Prospectus, neither the Company nor any of its Subsidiaries has either given or received any communication regarding the termination of, or intent not to renew, any of the leasehold interests of lessees in the Company’s and its Subsidiaries’ properties held under lease, any property operating agreement or any other agreement between the Company or its Subsidiaries and the operators of its properties or facilities, and no such termination or non-renewal has been threatened by the Company, any of its Subsidiaries or, to the Company’s knowledge, any other party to any such lease, other than as would not have, individually or in the aggregate, a Material Adverse Effect.

          (ee) Except for the Subsidiaries identified on Schedule 6(ee) to this Agreement (“Material Subsidiaries”), none of the Subsidiaries of the Company individually consist of more than 1.5%, or in the aggregate consist of more than 10%, of the Company’s (i) net assets, or (ii) revenues for the most recently ended quarterly period.

          (ff) There is and has been no failure on the part of the Company and, to the Company’s knowledge, any of the Company’s directors or officers, in their capacities as such, to comply with any provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith (collectively, the “Sarbanes Oxley Act”), including Section 402 relating to loans and Sections 302 and 906 related to certifications.

          (gg) Neither the Company nor any Subsidiary nor, to the knowledge of the Company, any director, trustee, officer, agent, employee or affiliate of the Company or any of its Subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other person or entity, for the purpose of financing any activities of any person currently subject to any U.S. sanctions administered by OFAC.

          (hh) The statistical and market and industry-related data included in the Prospectus are based on or derived from sources which the Company believes to be reliable and accurate or represent the Company’s good faith estimates that are made on the basis of data derived from such sources, and the Company has obtained the written consent to the use of such data from sources to the extent required.

          (ii) the Company’s independent registered public accounting firm and the Audit Committee of the Board of Directors of the Company have been advised of: (i) all significant deficiencies, if any, in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize and report financial data or any material weakness in internal controls; and (ii) all fraud, if any, whether or not material, that involves management or other employees who have a significant role in the internal controls of the Company and each of its Subsidiaries; since the date of the most recent evaluation of such internal controls, there has been no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; the principal executive officers (or their equivalents) and principal financial officers (or their equivalents) of the Company have made all certifications required by the Sarbanes-Oxley Act and any related rules and regulations promulgated by the Commission, and the statements contained in each such certification are complete and correct.

12

          (jj) The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 (e) of the 1934 Act) that comply with the requirements of the Exchange Act; such disclosure controls and procedures are effective.

          (kk) Neither the Company nor any of its Subsidiaries, or any director, officer, agent, employee or other person associated with or acting on behalf of the Company or any of its Subsidiaries, has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, or (iv) made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment.

          (ll) Any certificate signed by any officer of the Company and delivered to CF&Co or to counsel for CF&Co shall be deemed a representation and warranty by the Company to CF&Co as to the matters covered thereby.

     7. Covenants of the Company. The Company covenants and agrees with CF&Co that:

          (a) Registration Statement Amendments; Payment of Fees. After the date of this Agreement and during any period in which a Prospectus relating to any Placement Shares is required to be delivered by CF&Co under the Securities Act (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), (i) the Company will notify CF&Co promptly of the time when any subsequent amendment to the Registration Statement, other than documents incorporated by reference, has been filed with the Commission and/or has become effective or any subsequent supplement to the Prospectus has been filed and of any comment letter from the Commission or any request by the Commission for any amendment or supplement to the Registration Statement or Prospectus or for additional information, (ii) the Company will not file any amendment or supplement to the Registration Statement or Prospectus, other than documents incorporated by reference, relating to the Placement Shares or a security convertible into the Placement Shares unless a copy thereof has been submitted to CF&Co within a reasonable period of time before the filing and CF&Co has not reasonably objected thereto (provided, however, (A) that the failure of CF&Co to make such objection shall not relieve the Company of any obligation or liability hereunder, or affect CF&Co’s right to rely on the representations and warranties made by the Company in this Agreement and (B) that the Company has no obligation to provide CF&Co any advance copy of such filing or to provide CF&Co an opportunity to object to such filing if such filing does not name CF&Co or does not relate to the transactions contemplated hereunder) and the Company will furnish to CF&Co at the time of filing thereof a copy of any document that upon filing is deemed to be incorporated by reference into the Registration Statement or Prospectus, except for those documents available via EDGAR; and (iv) the Company will cause each amendment or supplement to the Prospectus, other than documents incorporated by reference, to be filed with the Commission as required pursuant to the applicable paragraph of Rule 424(b) of the Securities Act (without reliance on Rule 424(b)(8) of the Securities Act).

          (b) Notice of Commission Stop Orders. The Company will advise CF&Co, promptly after it receives notice or obtains knowledge thereof, of the issuance or threatened issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any other order preventing or suspending the use of the Prospectus, of the suspension of the qualification of the Placement Shares for offering or sale in any jurisdiction, or of the initiation or threatening of any proceeding for any such purpose or any examination pursuant to Section 8(e) of the Securities Act, or if the Company becomes the subject of a proceeding under Section 8A of the Securities Act in connection

13

with the offering of the Shares; and it will promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such a stop order should be issued.

          (c) Delivery of Prospectus; Subsequent Changes. During any period in which a Prospectus relating to the Placement Shares is required to be delivered by CF&Co under the Securities Act with respect to the offer and sale of the Placement Shares (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), the Company will use its best efforts to comply with all requirements imposed upon it by the Securities Act, as from time to time in force, and to file on or before their respective due dates all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14, 15(d) or any other provision of or under the Exchange Act. If during such period any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then existing, not misleading, or if during such period it is necessary to amend or supplement the Registration Statement or Prospectus to comply with the Securities Act, the Company will promptly notify CF&Co to suspend the offering of Placement Shares during such period and the Company will promptly amend or supplement the Registration Statement or Prospectus (at the expense of the Company) so as to correct such statement or omission or effect such compliance.

          (d) Listing of Placement Shares. During any period in which the Prospectus relating to the Placement Shares is required to be delivered by CF&Co under the Securities Act with respect to the offer and sale of the Placement Shares (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), the Company will use its commercially reasonable efforts to cause the Placement Shares to be listed on the Exchange and to qualify the Placement Shares for sale under the securities laws of such jurisdictions as CF&Co reasonably designates and to continue such qualifications in effect so long as required for the distribution of the Placement Shares; provided, however, that the Company shall not be required in connection therewith to qualify as a foreign entity or dealer in securities or file a general consent to service of process in any jurisdiction.

          (e) Filings with the Exchange. The Company will timely file with the Exchange all material documents and notices required by the Exchange of companies that have or will issue securities that are traded on the Exchange.

          (f) Delivery of Registration Statement and Prospectus. The Company will furnish to CF&Co and its counsel (at the expense of the Company) copies of the Registration Statement, the Prospectus (including all documents incorporated by reference therein) and all amendments and supplements to the Registration Statement or Prospectus that are filed with the Commission during any period in which a Prospectus relating to the Placement Shares is required to be delivered under the Securities Act (including all documents filed with the Commission during such period that are deemed to be incorporated by reference therein), in each case as soon as reasonably practicable and in such quantities as CF&Co may from time to time reasonably request and, at CF&Co’s request, will also furnish copies of the Prospectus to each exchange or market on which sales of the Placement Shares may be made ; provided, however, that the Company shall not be required to furnish any document (other than the Prospectus) to CF&Co to the extent such document is available on EDGAR.

          (g) Earnings Statement. The Company will make generally available to its security holders as soon as practicable, but in any event not later than 15 months after the end of the Company’s current fiscal quarter, an earnings statement covering a 12-month period that satisfies the provisions of Section 11(a)

14

and Rule 158 of the Securities Act. “Earnings statement” and “make generally available” will have the meanings contained in Rule 158 under the Securities Act.

          (h) Expenses. The Company, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated in accordance with the provisions of Section 11 hereunder, will pay all expenses incident to the performance of its obligations hereunder, including, but not limited to, expenses relating to (i) the preparation, printing and filing of the Registration Statement and each amendment and supplement thereto, of each Prospectus and of each amendment and supplement thereto, (ii) the preparation, issuance and delivery of the Placement Shares, (iii) the qualification of the Placement Shares under securities laws in accordance with the provisions of Section 7(d) of this Agreement, including filing fees, (iv) the printing and delivery to CF&Co of copies of the Prospectus and any amendments or supplements thereto, and of this Agreement, (v) the fees and expenses incurred in connection with the listing or qualification of the Placement Shares for trading on the Exchange, and (vi) filing fees and expenses, if any, of the Commission and the Financial Industry Regulatory Authority, Corporate Financing Department.

          (i) Use of Proceeds. The Company will apply the net proceeds from the sale of the Shares to be sold by it hereunder in accordance in all material respects with the statements under the caption “Use of Proceeds” in the Prospectus.

          (j) Notice of Other Sales. During the pendency of any Placement Notice given hereunder, the Company shall provide CF&Co notice as promptly as reasonably possible before it offers to sell, contracts to sell, sells, grants any option to sell or otherwise disposes of any Common Shares (other than Placement Shares offered pursuant to the provisions of this Agreement) or securities convertible into or exchangeable for Common Shares, warrants or any rights to purchase or acquire Common Shares; provided, that such notice shall not be required in connection with the (i) issuance, grant or sale of Common Shares, options to purchase Common Shares or Common Shares issuable upon the exercise of options or other equity awards pursuant to any stock option, stock bonus or other stock or compensatory plan or arrangement described in the Prospectus, (ii) the issuance of securities in connection with an acquisition, merger or sale or purchase of assets described in the Prospectus or (iii) the issuance or sale of Common Shares pursuant to any dividend reinvestment plan that the Company may adopt from time to time provided the implementation of such is disclosed to CF&Co in advance.

          (k) Change of Circumstances. The Company will, at any time during a fiscal quarter in which the Company intends to tender a Placement Notice or sell Placement Shares, advise CF&Co promptly after it shall have received notice or obtained knowledge thereof, of any information or fact that would alter or affect in any material respect any opinion, certificate, letter or other document provided to CF&Co pursuant to this Agreement.

          (l) Due Diligence Cooperation. The Company will cooperate with any reasonable due diligence review conducted by CF&Co or its agents in connection with the transactions contemplated hereby, including, without limitation, providing information and making available documents and senior officers, during regular business hours and at the Company’s principal offices, as CF&Co may reasonably request.

          (m) Required Filings Relating to Placement of Placement Shares. The Company agrees that on such dates as the Securities Act shall require, the Company will (i) file a prospectus supplement with the Commission under the applicable paragraph of Rule 424(b) under the Securities Act, which prospectus supplement will set forth, within the relevant period, the amount of Placement Shares sold through CF&Co, the Net Proceeds to the Company and the compensation payable by the Company to CF&Co

15

with respect to such Placement Shares, and (ii) deliver such number of copies of each such prospectus supplement to each exchange or market on which such sales were effected as may be required by the rules or regulations of such exchange or market.

          (n) Representation Dates; Certificate. On or prior to the date that the first Shares are sold pursuant to the terms of this Agreement and each time the Company (i) files the Prospectus relating to the Placement Shares or amends or supplements the Registration Statement or the Prospectus relating to the Placement Shares (other than a prospectus supplement filed in accordance with Section 7(m) of this Agreement) by means of a post-effective amendment, sticker, or supplement but not by means of incorporation of documents by reference into the Registration Statement or the Prospectus relating to the Placement Shares; (ii) files an annual report on Form 10-K under the Exchange Act; (iii) files its quarterly reports on Form 10-Q under the Exchange Act; or (iv) files a report on Form 8-K containing amended financial information (other than an earnings release, to “furnish” information pursuant to Items 2.02 or 7.01 of Form 8-K or to provide disclosure pursuant to Item 8.01 of Form 8-K relating to the reclassifications of certain properties as discontinued operations in accordance with Statement of Financial Accounting Standards No. 144) under the Exchange Act (each date of filing of one or more of the documents referred to in clauses (i) through (iv) shall be a “Representation Date”); the Company shall furnish CF&Co with a certificate, in the form attached hereto as Exhibit 7(n) within three (3) Trading Days of any Representation Date if requested by CF&Co. The requirement to provide a certificate under this Section 7(n) shall be waived for any Representation Date occurring at a time at which no Placement Notice is pending, which waiver shall continue until the earlier to occur of the date the Company delivers a Placement Notice hereunder (which for such calendar quarter shall be considered a Representation Date) and the next occurring Representation Date; provided, however, that such waiver shall not apply for any Representation Date on which the Company files its annual report on Form 10-K. Notwithstanding the foregoing, if the Company subsequently decides to sell Placement Shares following a Representation Date when the Company relied on such waiver and did not provide CF&Co with a certificate under this Section 7(n), then before the Company delivers the Placement Notice or CF&Co sells any Placement Shares, the Company shall provide CF&Co with a certificate, in the form attached hereto as Exhibit 7(n), dated the date of the Placement Notice.

          (o) Legal Opinion. On or prior to the date that the first Shares are sold pursuant to the terms of this Agreement and within three (3) Trading Days of each Representation Date with respect to which the Company is obligated to deliver a certificate in the form attached hereto as Exhibit 7(n) for which no waiver is applicable, the Company shall cause to be furnished to CF&Co a written opinion of Waller Lansden Dortch & Davis, LLP (“Company Counsel”), or other counsel satisfactory to CF&Co, in form and substance satisfactory to CF&Co and its counsel, dated the date that the opinion is required to be delivered, modified, as necessary, to relate to the Registration Statement and the Prospectus as then amended or supplemented; provided, however, that in lieu of such opinions for subsequent Representation Dates, counsel may furnish CF&Co with a letter (a “Reliance Letter”) to the effect that CF&Co may rely on a prior opinion delivered under this Section 7(o) to the same extent as if it were dated the date of such letter (except that statements in such prior opinion shall be deemed to relate to the Registration Statement and the Prospectus as amended or supplemented at such Representation Date).

          (p) Comfort Letter. On or prior to the date that the first Shares are sold pursuant to the terms of this Agreement and within three (3) Trading Days of each Representation Date with respect to which the Company is obligated to deliver a certificate in the form attached hereto as Exhibit 7(n) for which no waiver is applicable, the Company shall cause its independent registered public accounting firm (and any other independent registered public accounting firm whose report is included in the Registration Statement or the Prospectus) to furnish CF&Co letters (the “Comfort Letters”), dated the date the

16

Comfort Letter is delivered, in form and substance satisfactory to CF&Co, (i) confirming that they are an independent registered public accounting firm within the meaning of the Securities Act, the Exchange Act and the rules adopted by the PCAOB, (ii) stating, as of such date, the conclusions and findings of such firm with respect to the financial information and other matters ordinarily covered by accountants’ “comfort letters” to underwriters in connection with registered public offerings (the first such letter, the “Initial Comfort Letter”) and (iii) updating the Initial Comfort Letter with any information that would have been included in the Initial Comfort Letter had it been given on such date and modified as necessary to relate to the Registration Statement and the Prospectus, as amended and supplemented to the date of such letter.

          (q) Market Activities. The Company will not, directly or indirectly, (i) take any action designed to cause or result in, or that constitutes or might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares or (ii) sell, bid for, or purchase the Shares to be issued and sold pursuant to this Agreement, or pay anyone any compensation for soliciting purchases of the Shares to be issued and sold pursuant to this Agreement other than CF&Co; provided, however, that the Company may bid for and purchase its Common Shares in accordance with Rule 10b-18 under the Exchange Act.

          (r) Insurance. The Company and its Subsidiaries shall maintain, or cause to be maintained, insurance in such amounts and covering such risks as is reasonable and customary for companies engaged in similar businesses in similar industries.

          (s) Compliance with Laws. The Company and each of its Subsidiaries shall maintain, or cause to be maintained, all material environmental permits, licenses and other authorizations required by federal, state and local law in order to conduct their businesses as described in the Prospectus, and the Company and each of its Subsidiaries shall conduct their businesses, or cause their businesses to be conducted, in substantial compliance with such permits, licenses and authorizations and with applicable environmental laws, except where the failure to maintain or be in compliance with such permits, licenses and authorizations could not reasonably be expected to have a Material Adverse Effect.

          (t) REIT Treatment. The Company currently intends to continue to elect to qualify as a real estate investment trust under the Code and will use all reasonable efforts to enable the Company to continue to meet the requirements for qualification and taxation as a REIT under the Code for subsequent tax years that include any portion of the term of this Agreement. For the fiscal year ended December 31, 2009, the Company had retained BDO Seidman, LLP as its independent registered public accounting firm. In the course of its audit BDO Seidman reviewed the Company’s test procedures and conducted annual compliance reviews designed to determine the Company’s compliance with REIT provisions of the Code. The Company monitors and maintains appropriate accounting systems and procedures designed to determine compliance with the REIT provisions of the Code. For the 2010 fiscal year the Company has engaged BDO Seidman to prepare an audit, including a review of the Company’s test procedures and to conduct annual compliance reviews designed to determine the Company’s compliance with REIT provisions of the Code. The Company will continue to monitor and maintain appropriate accounting systems and procedures designed to determine compliance with the REIT provisions of the Code

          (u) Investment Company Act. The Company is familiar with the 1940 Act and the rules and regulations thereunder, and will in the future use its reasonable best efforts to ensure that the Company will not be an “investment company” within the meaning of the 1940 Act and the rules and regulations thereunder.

17

          (v) Securities Act and Exchange Act. The Company will use its best efforts to comply with all requirements imposed upon it by the Securities Act and the Exchange Act as from time to time in force, so far as necessary to permit the continuance of sales of, or dealings in, the Placement Shares as contemplated by the provisions hereof and the Prospectus.

          (w) No Offer to Sell. Other than a free writing prospectus (as defined in Rule 405 under the Securities Act) approved in advance in writing by the Company and CF&Co in its capacity as principal or agent hereunder, neither CF&Co nor the Company (including its agents and representatives, other than CF&Co in its capacity as such) will, directly or indirectly, use, authorize, approve or refer to any free writing prospectus relating to the Shares to be sold by CF&Co as principal or agent hereunder.

          (x) Sarbanes-Oxley Act. The Company, and each of the Material Subsidiaries, will use reasonable commercial efforts to maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded book value for assets is compared with the fair market value of such assets (computed in accordance with generally accepted accounting principles) at reasonable intervals and appropriate action is taken with respect to any differences. The Company will use reasonable commercial efforts to comply with all requirements imposed upon it by the Sarbanes-Oxley Act and the rules and regulations of the Commission and the Exchange promulgated thereunder.

          (y) Register and Transfer Agent. The Company shall maintain, at its expense, a registrar and transfer agent for the Common Shares.

     8. Conditions to CF&Co’s Obligations. The obligations of CF&Co hereunder with respect to a Placement will be subject to the continuing accuracy and completeness of the representations and warranties made by the Company herein, to the performance by the Company of its obligations hereunder, to the completion by CF&Co of a due diligence review satisfactory to CF&Co in its reasonable judgment, and to the continuing satisfaction (or waiver by CF&Co in its sole discretion) of the following additional conditions:

          (a) Registration Statement Effective. The Registration Statement shall be effective and shall be available for (i) all sales of Placement Shares issued pursuant to all prior Placement Notices and (ii) the sale of all Placement Shares contemplated to be issued by any Placement Notice.

          (b) No Material Notices. None of the following events shall have occurred and be continuing: (i) receipt by the Company or any of its Subsidiaries of any request for additional information from the Commission or any other federal or state governmental authority during the period of effectiveness of the Registration Statement, the response to which would require any post-effective amendments or supplements to the Registration Statement or the Prospectus; (ii) the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Placement Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; or (iv) the occurrence of any event that makes any material statement made in the Registration Statement or the Prospectus or any material document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, related Prospectus or such documents so that, in the case of the Registration Statement, it will not contain any materially untrue statement of a material fact or omit to

18

state any material fact required to be stated therein or necessary to make the statements therein not misleading and, that in the case of the Prospectus, it will not contain any materially untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

          (c) No Misstatement or Material Omission. CF&Co shall not have advised the Company that the Registration Statement or Prospectus, or any amendment or supplement thereto, contains an untrue statement of fact that in CF&Co’s reasonable opinion is material, or omits to state a fact that in CF&Co’s opinion is material and is required to be stated therein or is necessary to make the statements therein not misleading.

          (d) Material Changes. Except as contemplated in the Prospectus, or disclosed in the Company’s reports filed with the Commission, there shall not have been any material adverse change, on a consolidated basis, in the authorized capital stock of the Company or any Material Adverse Effect, or any development that could reasonably be expected to cause a Material Adverse Effect, or any downgrading in or withdrawal of the rating assigned to any of the Company’s securities (other than asset backed securities) by any rating organization or a public announcement by any rating organization that it has under surveillance or review its rating of any of the Company’s securities (other than asset backed securities), the effect of which, in the case of any such action by a rating organization described above, in the reasonable judgment of CF&Co (without relieving the Company of any obligation or liability it may otherwise have), is so material as to make it impracticable or inadvisable to proceed with the offering of the Placement Shares on the terms and in the manner contemplated in the Prospectus.

          (e) Legal Opinion. CF&Co shall have received the opinion of Company Counsel required to be delivered pursuant Section 7(o) on or before the date on which such delivery of such opinion is required pursuant to Section 7(o).

          (f) Comfort Letter. CF&Co shall have received the Comfort Letter required to be delivered pursuant Section 7(p) on or before the date on which such delivery of such Comfort Letter is required pursuant to Section 7(p).

          (g) Representation Certificate. CF&Co shall have received the certificate required to be delivered pursuant to Section 7(n) on or before the date on which delivery of such certificate is required pursuant to Section 7(n).

          (h) No Suspension. Trading in the Common Shares shall not have been suspended on the Exchange.

          (i) Other Materials. On each date on which the Company is required to deliver a certificate pursuant to Section 7(n), the Company shall have furnished to CF&Co such appropriate further information, certificates and documents as CF&Co may have reasonably requested. All such opinions, certificates, letters and other documents shall have been in compliance with the provisions hereof. The Company shall have furnished CF&Co with such conformed copies of such opinions, certificates, letters and other documents as CF&Co shall have reasonably requested.

          (j) Securities Act Filings Made. All filings with the Commission required by Rule 424 under the Securities Act to have been filed prior to the issuance of any Placement Notice hereunder shall have been made within the applicable time period prescribed for such filing by Rule 424.

          (k) Approval for Listing. The Placement Shares shall either have been (i) approved for listing on the Exchange, subject only to notice of issuance, or (ii) the Company shall have filed an application for listing of the Placement Shares on the Exchange at, or prior to, the issuance of any Placement Notice.

19

          (l) No Termination Event. There shall not have occurred any event that would permit CF&Co to terminate this Agreement pursuant to Section 11(a).

     9. Indemnification and Contribution.

          (a) Company Indemnification. The Company agrees to indemnify and hold harmless CF&Co, the directors, officers, partners, employees and agents of CF&Co and each person, if any, who (i) controls CF&Co within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, or (ii) is controlled by or is under common control with CF&Co (a “CF&Co Affiliate”) from and against any and all losses, claims, liabilities, expenses and damages (including, but not limited to, any and all reasonable investigative, legal and other expenses incurred in connection with, and any and all amounts paid in settlement (in accordance with Section 9(c)) of, any action, suit or proceeding between any of the indemnified parties and any indemnifying parties or between any indemnified party and any third party, or otherwise, or any claim asserted), as and when incurred, to which CF&Co, or any such person, may become subject under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, liabilities, expenses or damages arise out of or are based, directly or indirectly, on (x) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus or any amendment or supplement to the Registration Statement or the Prospectus or in any Free Writing Prospectus approved by the Company in accordance with Section 7(v) hereof, or in any application or other document executed by or on behalf of the Company or based on written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify the Shares under the securities laws thereof or filed with the Commission, or (y) the omission or alleged omission to state in any such document a material fact required to be stated in it or necessary to make the statements in it not misleading; provided, however, that this indemnity agreement shall not apply to the extent that such loss, claim, liability, expense or damage arises from the sale of the Placement Shares pursuant to this Agreement and is caused directly or indirectly by an untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information relating to CF&Co and furnished to the Company by CF&Co expressly for inclusion in any document as described in clause (x) of this Section 9(a). This indemnity agreement will be in addition to any liability that the Company might otherwise have.

          (b) CF&Co Indemnification. CF&Co agrees to indemnify and hold harmless the Company, its directors, each officer of the Company that signed the Registration Statement, and each person, if any, who (i) controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act or (ii) is controlled by or is under common control with the Company (a “Company Affiliate”) from and against any and all losses, claims, liabilities and expenses and damages described in the indemnity contained in Section 9(a), as and when incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendments thereto) or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information relating to CF&Co and furnished to the Company by CF&Co expressly for inclusion in any document as described in clause (x) of Section 9(a) or with respect to statements or omissions, or alleged untrue statements or omissions, made in any Free Writing Prospectus used by CF&Co and not previously approved by the Company in accordance with Section 7(v) hereof.

          (c) Procedure. Any party that proposes to assert the right to be indemnified under this Section 9 will, promptly after receipt of notice of commencement of any action against such party in respect of which a claim is to be made against an indemnifying party under this Section 9, notify such indemnifying party of the commencement of such action, enclosing a copy of all papers served, but the omission so to

20

notify such indemnifying party will not relieve the indemnifying party from (i) any liability that it might have to any indemnified party otherwise than under this Section 9 and (ii) any liability that it may have to any indemnified party under the foregoing provision of this Section 9 unless, and only to the extent that, such omission results in the forfeiture of substantive rights or defenses by the indemnifying party. If any such action is brought against any indemnified party and it notifies the indemnifying party of its commencement, the indemnifying party will be entitled to participate in and, to the extent that it elects by delivering written notice to the indemnified party promptly after receiving notice of the commencement of the action from the indemnified party, to assume the defense of the action, with counsel reasonably satisfactory to the indemnified party, and after notice from the indemnifying party to the indemnified party of its election to assume the defense, the indemnifying party will not be liable to the indemnified party for any legal or other expenses except as provided below and except for the reasonable costs of investigation subsequently incurred by the indemnified party in connection with the defense. The indemnified party will have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel will be at the expense of such indemnified party unless (i) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (ii) the indemnified party has reasonably concluded (based on advice of counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (iii) a conflict or potential conflict exists (based on advice of counsel to the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (iv) the indemnifying party has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm admitted to practice in such jurisdiction at any one time for all such indemnified party or parties. All such fees, disbursements and other charges will be reimbursed by the indemnifying party promptly as they are incurred. An indemnifying party will not, in any event, be liable for any settlement of any action or claim effected without its written consent. No indemnifying party shall, without the prior written consent of each indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated by this Section 9 (whether or not any indemnified party is a party thereto), unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising or that may arise out of such claim, action or proceeding.

          (d) Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in the foregoing paragraphs of this Section 9 is applicable in accordance with its terms but for any reason is held to be unavailable from the Company or CF&Co, the Company and CF&Co will contribute to the total losses, claims, liabilities, expenses and damages (including any investigative, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted, but after deducting any contribution received by the Company from persons other than CF&Co, such as persons who control the Company within the meaning of the Securities Act, officers of the Company who signed the Registration Statement and directors of the Company, who also may be liable for contribution) to which the Company and CF&Co may be subject in such proportion as shall be appropriate to reflect the relative benefits received by the Company on the one hand, and CF&Co, on the other. The relative benefits received by the Company on the one hand and CF&Co on the other hand shall be deemed to

21

be in the same proportion as the total net proceeds from the sale of the Placement Shares (net of commissions to CF&Co but before deducting expenses) received by the Company bear to the total compensation received by CF&Co from the sale of Placement Shares on behalf of the Company. If, but only if, the allocation provided by the foregoing sentence is not permitted by applicable law, the allocation of contribution shall be made in such proportion as is appropriate to reflect not only the relative benefits referred to in the foregoing sentence but also the relative fault of the Company on the one hand, and CF&Co, on the other, with respect to the statements or omission that resulted in such loss, claim, liability, expense or damage, or action in respect thereof, as well as any other relevant equitable considerations with respect to such offering. Such relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand, or CF&Co, on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and CF&Co agree that it would not be just and equitable if contributions pursuant to this Section 9(d) were to be determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, liability, expense, or damage, or action in respect thereof, referred to above in this Section 9(d) shall be deemed to include, for the purpose of this Section 9(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim to the extent consistent with Section 9(c) hereof. Notwithstanding the foregoing provisions of this Section 9(d), CF&Co shall not be required to contribute any amount in excess of the commissions received by it under this Agreement and no person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was found not guilty of such fraudulent misrepresentation. For purposes of this Section 9(d), any person who controls a party to this Agreement within the meaning of the Securities Act, and any officers, directors, partners, employees or agents of CF&Co, will have the same rights to contribution as that party, and each officer and director of the Company who signed the Registration Statement will have the same rights to contribution as the Company, subject in each case to the provisions hereof. Any party entitled to contribution, promptly after receipt of notice of commencement of any action against such party in respect of which a claim for contribution may be made under this Section 9(d), will notify any such party or parties from whom contribution may be sought, but the omission to so notify will not relieve that party or parties from whom contribution may be sought from any other obligation it or they may have under this Section 9(d) except to the extent that the failure to so notify such other party materially prejudiced the substantive rights or defenses of the party from whom contribution is sought. Except for a settlement entered into pursuant to the last sentence of Section 9(c) hereof, no party will be liable for contribution with respect to any action or claim settled without its written consent if such consent is required pursuant to Section 9(c) hereof.

     10. Representations and Agreements to Survive Delivery. The indemnity and contribution agreements contained in Section 9 of this Agreement and all representations and warranties of the Company herein or in certificates delivered pursuant hereto shall survive, as of their respective dates, regardless of (i) any investigation made by or on behalf of CF&Co, any controlling persons, or the Company (or any of its respective officers, directors or controlling persons), (ii) delivery and acceptance of the Placement Shares and payment therefor or (iii) any termination of this Agreement.

     11. Termination.

          (a) CF&Co shall have the right by giving notice as hereinafter specified at any time to terminate this Agreement if (i) any Material Adverse Effect, or any development that has actually occurred and

22

that is reasonably expected to cause a Material Adverse Effect has occurred, that, in the reasonable judgment of CF&Co, may materially impair the ability of CF&Co to sell the Placement Shares hereunder; (ii) the Company shall have failed, refused or been unable to perform any agreement on its part to be performed hereunder; provided, however, in the case of any failure of the Company to deliver (or cause another person to deliver) any certification, opinion, or letter required under Sections 7(n), 7(o), or 7(p), CF&Co’s right to terminate shall not arise unless such failure to deliver (or cause to be delivered) continues for more than thirty (30) days from the date such delivery was required; or (iii) any other condition of CF&Co’s obligations hereunder is not fulfilled; or (iv), any suspension or limitation of trading in the Placement Shares or in securities generally on the Exchange shall have occurred. Any such termination shall be without liability of any party to any other party except that the provisions of Section 7(h) (Expenses), Section 9 (Indemnification), Section 10 (Survival of Representations), Section 16 (Applicable Law; Consent to Jurisdiction) and Section 17 (Waiver of Jury Trial) hereof shall remain in full force and effect notwithstanding such termination.

          (b) The Company shall have the right, by giving ten (10) days notice as hereinafter specified to terminate this Agreement in its sole discretion at any time after the date of this Agreement. Any such termination shall be without liability of any party to any other party except that the provisions of Section 7(h), Section 9, Section 10, Section 16 and Section 17 hereof shall remain in full force and effect notwithstanding such termination.

          (c) CF&Co shall have the right, by giving ten (10) days notice as hereinafter specified to terminate this Agreement in its sole discretion at any time after the date of this Agreement. Any such termination shall be without liability of any party to any other party except that the provisions of Section 7(h), Section 9, Section 10, Section 16 and Section 17 hereof shall remain in full force and effect notwithstanding such termination.

          (d) Unless earlier terminated pursuant to this Section 11, this Agreement shall automatically terminate upon the issuance and sale of all of the Shares through CF&Co on the terms and subject to the conditions set forth herein; provided that the provisions of Section 7(h), Section 9, Section 10, Section 16 and Section 17 hereof shall remain in full force and effect notwithstanding such termination.

          (e) This Agreement shall remain in full force and effect unless terminated pursuant to Sections 11(a), (b), (c), or (d) above or otherwise by mutual agreement of the parties; provided, however, that any such termination by mutual agreement shall in all cases be deemed to provide that Section 7(h), Section 9, Section 10, Section 16 and Section 17 shall remain in full force and effect.

          (f) Any termination of this Agreement shall be effective on the date of receipt of such notice by CF&Co or the Company, as the case may be. If such termination shall occur prior to the Settlement Date for any sale of Placement Shares, such Placement Shares shall settle in accordance with the provisions of this Agreement.

     12. Notices. All notices or other communications required or permitted to be given by any party to any other party pursuant to the terms of this Agreement shall be in writing, unless otherwise specified in this Agreement, and if sent to CF&Co, shall be delivered to CF&Co at Cantor Fitzgerald & Co., 499 Park Avenue, New York, New York 10022, fax no. (212) 308-3730, Attention: ITD Capital Markets/Jeff Lumby, with copies to Stephen Merkel, General Counsel, at the same address, and Bryan Cave LLP, One Metropolitan Square, 211 N. Broadway Suite 3600, St. Louis, Missouri 63102, fax no. (314) 552-8711, Attention: William L. Cole; or if sent to the Company at 3310 West End Avenue, Suite 700, Nashville, TN 37203, attention: General Counsel, facsimile number (615) 269-8461, with a copy to Waller Lansden Dortch & Davis, LLP, Attention: James H. Nixon III, facsimile number (615) 244-6804. Each party to this Agreement may change such address for notices by sending to the

23

parties to this Agreement written notice of a new address for such purpose. Each such notice or other communication shall be deemed given (i) when delivered personally or by verifiable facsimile transmission (with an original to follow) on or before 4:30 p.m., New York City time, on a Business Day or, if such day is not a Business Day, on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to a nationally-recognized overnight courier and (iii) on the Business Day actually received if deposited in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid). For purposes of this Agreement, “Business Day” shall mean any day on which the Exchange and commercial banks in the City of New York are open for business.

     13. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Company and CF&Co and their respective successors and the affiliates, controlling persons, officers and directors referred to in Section 9 hereof. References to any of the parties contained in this Agreement shall be deemed to include the successors and permitted assigns of such party. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. Neither party may assign its rights or obligations under this Agreement without the prior written consent of the other party; provided, however, that CF&Co may assign its rights and obligations hereunder to an affiliate of CF&Co without obtaining the Company’s consent.

     14. Adjustments for Stock Splits. The parties acknowledge and agree that all stock-related numbers contained in this Agreement shall be adjusted to take into account any stock split, stock dividend or similar event effected with respect to the Shares.

     15. Entire Agreement; Amendment; Severability. This Agreement (including all schedules and exhibits attached hereto and Placement Notices issued pursuant hereto) constitutes the entire agreement and supersedes all prior and contemporaneous agreements and undertakings, both written and oral, among the parties hereto with regard to the subject matter hereof. Neither this Agreement nor any term hereof may be amended except pursuant to a written instrument executed by the Company and CF&Co. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable as written by a court of competent jurisdiction, then such provision shall be given full force and effect to the fullest possible extent that it is valid, legal and enforceable, and the remainder of the terms and provisions herein shall be construed as if such invalid, illegal or unenforceable term or provision was not contained herein, but only to the extent that giving effect to such provision and the remainder of the terms and provisions hereof shall be in accordance with the intent of the parties as reflected in this Agreement.

     16. Applicable Law; Consent to Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to the principles of conflicts of laws. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection with any transaction contemplated hereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper, though neither party shall be precluded from removing an action that is subject to removal from state to federal court. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof (certified or registered mail, return receipt requested) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

24

     17. Waiver of Jury Trial. The Company and CF&Co each hereby irrevocably waives any right it may have to a trial by jury in respect of any claim based upon or arising out of this Agreement or any transaction contemplated hereby.

     18. Absence of Fiduciary Relationship. The Company agrees that:

          (a) CF&Co has been retained solely to act as underwriter in connection with the sale of the Shares that no fiduciary, advisory or agency relationship between the Company and CF&Co has been created in respect of any of the transactions contemplated by this Agreement, irrespective of whether CF&Co has advised or is advising the Company on other matters;

          (b) the Company is capable of evaluating and understanding and understand and accept the terms, risks and conditions of the transactions contemplated by this Agreement;

          (c) the Company has been advised that CF&Co and its affiliates are engaged in a broad range of transactions which may involve interests that differ from those of the Company and that CF&Co has no obligation to disclose such interests and transactions to the Company by virtue of any fiduciary, advisory or agency relationship; and

          (d) the Company waives, to the fullest extent permitted by law, any claims it may have against CF&Co, for breach of fiduciary duty or alleged breach of fiduciary duty and agrees that CF&Co shall have no liability (whether direct or indirect) to the Company in respect of such a fiduciary claim or to any person asserting a fiduciary duty claim on behalf of or in right of the Company including stockholders, partners, employees or creditors of the Company.

     19. 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 one and the same instrument. Delivery of an executed Agreement by one party to the other may be made by facsimile transmission.

     20. Definitions. As used in this Agreement, “GAAP” means United States generally accepted accounting principles.

[Remainder of Page Intentionally Blank]

25

     If the foregoing correctly sets forth the understanding between the Company and CF&Co, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement between the Company and CF&Co.

Very truly yours, HEALTHCARE REALTY TRUST INCORPORATED
By:	/s/ Scott W. Holmes
Name:		Scott W. Holmes
Title:		Executive Vice President and Chief Financial Officer]
ACCEPTED as of the date first-above written: CANTOR FITZGERALD & CO.
By:	/s/ Jeffrey Lumby
Name:		Jeffrey Lumby
Title:		Managing Director

26

SCHEDULE 1

FORM OF PLACEMENT NOTICE

From:	[          ]
Cc:	[          ]
To:	[          ]
Subject:	Controlled Equity Offering—Placement Notice

Gentlemen:

Pursuant to the terms and subject to the conditions contained in the Controlled Equity Offering^SM Sales Agreement dated February 22, 2010 between HEALTHCARE REALTY TRUST INCORPORATED (the “Company”) and Cantor Fitzgerald & Co. (“CF&CO”) (the “Agreement”), I hereby request on behalf of the Company that CF&Co sell up to [ ] shares of the Company’s common stock, par value $0.01 per share, at a minimum market price of $                     per share.

SCHEDULE 2

CANTOR FITZGERALD & CO.

Jeff Lumby	jlumby@cantor.com
Joshua Feldman	jfeldman@cantor.com
Peter Dippolito	pdippolito@cantor.com

HEALTHCARE REALTY TRUST INCORPORATED

David R. Emery	demery@healthcarerealty.com
Scott W. Holmes	sholmes@healthcarerealty.com
Frederick M. Langreck	rlangreck@healthcarerealty.com
John M. Bryant, Jr.	jbryant@healthcarerealty.com
B. Douglas Whitman, II	dwhitman@healthcarerealty.com
Andrew E. Loope	aloope@healthcarerealty.com

SCHEDULE 3

Compensation

CF&Co shall be paid compensation up to two percent (2.0%) of the gross proceeds from the sales of the Shares.

SCHEDULE 6(ee)

1. Allenmore C, LLC
2. Clive Wellness Campus Building One, LLC
3. HR Acquisition I Corporation
4. HR Acquisition of San Antonio, Ltd.
5. HR Acquisition of Pennsylvania, Inc.
6. HR of Carolinas, LLC
7. HR of Iowa, LLC
8. HR of Los Angeles, Ltd.
9. HR-Pima, LLC
10. HRT of Illinois, Inc.
11. HRT of Roanoke, Inc.
12. HRT of Tennessee Inc.
13. HRT Properties of Texas, Ltd.
14. Pennsylvania HRT, Inc.
15. Roseburg Surgery Center, LLC
16. Stevens Pavilion, LLC

Exhibit 7(n)

OFFICER CERTIFICATE

The undersigned, the duly qualified and elected                      of HEALTHCARE REALTY TRUST INCORPORATED (the “Company”), a Maryland corporation, does hereby certify in such capacity and on behalf of the Company, pursuant to Section 7(n) of the Sales Agreement dated February 22, 2010 (the “Sales Agreement”) between the Company and Cantor Fitzgerald & Co., that to the best of the knowledge of the undersigned:

(i) The representations and warranties of the Company in Section 6 of the Sales Agreement (A) to the extent such representations and warranties are subject to qualifications and exceptions contained therein relating to materiality or Material Adverse Effect, are true and correct on and as of the date hereof with the same force and effect as if expressly made on and as of the date hereof, except for those representations and warranties that speak solely as of a specific date and which were true and correct as of such date, and (B) to the extent such representations and warranties are not subject to any qualifications or exceptions, are true and correct in all material respects as of the date hereof as if made on and as of the date hereof with the same force and effect as if expressly made on and as of the date hereof except for those representations and warranties that speak solely as of a specific date and which were true and correct in all material respects as of such date; and

(ii) The Company has complied with all agreements and satisfied all conditions on their part to be performed or satisfied pursuant to the Sales Agreement at or prior to the date hereof.

By: 

Name: 

Title: 

Date: 

EX-5

Exhibit 5

Waller Lansden Dortch & Davis, LLP

Nashville City Center
511 Union Street, Suite 2700
Nashville, Tennessee 37219-8966
(615) 244-6380
Fax: (615) 244-6804
www.wallerlaw.com


1901 Sixth Avenue North, Suite 1400 Birmingham, Alabama 35203-2623 (205) 214-6380

February 22, 2010

Healthcare Realty Trust Incorporated
3310 West End Avenue, Suite 700
Nashville, TN 37203

          Re:     Healthcare Realty Trust Incorporated

Ladies and Gentlemen:

     In our capacity as special securities counsel to Healthcare Realty Trust Incorporated, a Maryland corporation (the “Company”), we have examined the Registration Statement on Form S-3 (Registration No. 333-150884) filed by the Company under the Securities Act of 1933, as amended, the related Prospectus dated May 13, 2008 (the “Prospectus”), as supplemented by the Prospectus Supplement dated February 22, 2010 (the “Prospectus Supplement”) as filed by the Company on February 22, 2010, relating to the offering of up to 5,000,000 shares of the common stock, par value $.01 per share, of the Company (the “Common Stock”). In this regard, we have examined and relied upon such records, documents and other instruments as in our judgment are necessary or appropriate in order to express the opinions hereinafter set forth and have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity to original documents of all documents submitted to us as certified or photostatic copies.

     Based upon the foregoing, we are of the opinion that the 5,000,000 shares of Common Stock referred to in the Prospectus Supplement, to the extent actually issued and sold in the manner and on the terms described in the Controlled Equity Offering Sales Agreement, dated February 22, 2010, between the Company and Cantor Fitzgerald & Co., the Prospectus and the Prospectus Supplement, will be duly and validly issued, fully paid and nonassessable shares of the Common Stock of the Company.

     We hereby consent to the filing of this opinion as an exhibit to the Company’s annual report on Form 10-K for the year ended December 31, 2009 and further consent to the reference to us under the caption “Legal Matters” in the Prospectus and the Prospectus Supplement. This consent is not to be construed as an admission that we are a party whose consent is required to be filed with the Prospectus or the Prospectus Supplement under the provisions of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission promulgated thereunder.

Very truly yours,
 

/s/ Waller Lansden Dortch & Davis, LLP  

EX-8

Exhibit 8

Waller Lansden Dortch & Davis, LLP

Nashville City Center
511 Union Street, Suite 2700
Nashville, Tennessee 37219-8966
(615) 244-6380
Fax: (615) 244-6804
www.wallerlaw.com


1901 Sixth Avenue North, Suite 1400 Birmingham, Alabama 35203-2623 (205) 214-6380

February 22, 2010

Healthcare Realty Trust Incorporated
3310 West End Avenue
Nashville, TN 37203

Re:  Issuance and sale of up to 5,000,000 shares of common stock of Healthcare Realty Trust Incorporated

Ladies and Gentlemen:

     We have acted as special tax counsel to Healthcare Realty Trust Incorporated, a Maryland corporation (the “Company”), in connection with the proposed offering and sale of up to 5,000,000 shares of common stock, par value $0.01 per share, of the Company under that certain Sales Agreement dated February 22, 2010, by and between the Company and Cantor Fitzgerald & Co. (the “Offering”). The Offering is described more fully in the prospectus supplement, as filed by the Company on February 22, 2010 (the “Prospectus Supplement”) and the accompanying prospectus dated May 13, 2008 (together with the Prospectus Supplement, the “Prospectus”) that form part of the Company’s effective registration statement on Form S-3 (Reg. No. 333-150884) (the “Registration Statement”). In connection with the Offering, you have requested the opinions set forth below.

     The opinions set forth in this letter are based on relevant current provisions of the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations thereunder (including proposed and temporary Treasury Regulations), and interpretations of the foregoing as expressed in court decisions, applicable legislative history, and the administrative rulings and practices of the Internal Revenue Service (the “IRS”), including its practices and policies in issuing private letter rulings, which are not binding on the IRS except with respect to a taxpayer that receives such a ruling, all as of the date hereof. These provisions and interpretations are subject to change, which may or may not be retroactive in effect, and which might result in material modifications of our opinions. Our opinions do not foreclose the possibility of a contrary determination by the IRS or a court of competent jurisdiction, or of a contrary position taken by the IRS or the Treasury Department in regulations or rulings issued in the future. In this regard, an opinion of counsel with respect to an issue represents counsel’s best professional judgment with respect to the outcome on the merits with respect to such issue, if such issue were to be litigated, but an opinion is not binding on the IRS or the courts, and is not a guarantee that the IRS will not assert a contrary position with respect to such issue or that a court will not sustain such a position asserted by the IRS.

     In rendering the opinions expressed herein, we have examined and relied on the following documents:

     1. Schedules prepared and delivered by officials of the Company setting forth:

          (a) Real estate investment trust (“REIT”) taxable and gross income for the taxable year ended December 31, 2009, together with a schedule of actual dividends distributed and projected dividends to be distributed in accordance with Code Section 858 and compliance with the distribution requirements of Code Section 857(a).

          (b) Compliance with the applicable REIT ratios or tests for the taxable year ended December 31, 2009, including:

     Income tests:

(1)	95% gross income test for the year; and
(2)	75% gross income test for the year.

     Asset tests:

(1)	75% asset test at the end of each quarter;
(2)	25% asset test at the end of each quarter;
(3)	10% asset test at the end of each quarter; and
(4)	5% asset test at the end of each quarter.

     2. Schedules prepared and delivered by officials of the Company setting forth for all taxable years of the Company from and including the first year with respect to which the Company elected REIT status through the taxable year ended December 31, 2009, the information described in paragraph 1 above and including, for taxable years ended on or prior to December 31, 1997, the 30% gross income test.

     3. The Company’s certificate, dated February 22, 2010 (the “Certificate”).

     4. The factual statements contained in the Registration Statement (including the Prospectus).

     In addition, we have examined such additional records, documents, certificates and other instruments and made such investigations of fact and law as in our judgment are necessary or appropriate to enable us to render the opinions expressed below. Any material variation or difference in the facts from those set forth in the documents that we have reviewed and upon which we have relied (including, in particular, the Certificate) may adversely affect the conclusions stated herein.

     In our examination of the foregoing documents, we have assumed, with your consent, that (i) all of the representations and statements set forth in the documents (including, without limitation, the Certificate) we reviewed are true and correct, and all of the obligations imposed by any such documents on the parties thereto have been and will be performed or satisfied in accordance with

their terms; (ii) the genuineness of all signatures, the proper execution of all documents, the authenticity of all documents submitted to us as originals, the conformity to originals of documents submitted to us as copies, and the authenticity of the originals from which any copies were made; (iii) the Company at all times will operate in accordance with its past and proposed method of operation as described in its filings with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended and as described in the Certificate; (iv) the Company is a validly organized and duly incorporated corporation under the laws of the State of Maryland; and (v) any “Excess Shares” (defined in the Company’s Second Articles of Amendment and Restatement to be shares of a value exceeding 9.9% in value of the outstanding shares of the Company) held or deemed held by any person (pursuant to applicable rules of attribution) are deemed to have no value or voting rights.

     Based upon, subject to, and limited by the assumptions and qualifications set forth herein, we are of the opinion that:

     (A) the Company was and is organized in conformity with the requirements for qualification as a REIT under the Code and its current method of operation as described in the Registration Statement (including the Prospectus) and the Certificate permits it to meet the requirements for qualification and taxation as a REIT under the Code for the current and subsequent taxable years; and

     (B) with respect to the taxable years of the Company ended December 31, 1993, through December 31, 2009, the Company met the requirements for qualification and taxation as a REIT under the Code.

     We also hereby confirm the statements made under the caption “Federal Income Tax and ERISA Considerations” in the Prospectus, and under Item 1 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, incorporated by reference therein, under the captions “Federal Income Tax Information” and “ERISA Considerations.”

     The opinions set forth above represent our conclusions based upon the documents, facts, representations and assumptions referred to above. Any material amendments to such documents, changes in any significant facts or inaccuracy of such representations or assumptions could affect the opinions referred to herein. Moreover, the Company’s qualification and taxation as a REIT under the Code depends upon the ability of the Company to meet for each taxable year, through actual annual operating results, requirements under the Code regarding gross income, assets, distributions and diversity of stock ownership. We have not undertaken, and will not undertake, to review the Company’s compliance with these requirements on a continuing basis. Accordingly, no assurance can be given that the actual results of the Company’s operations, the sources of its income, the nature of its assets, the level of its distributions to shareholders and the diversity of its share ownership for any given taxable year will satisfy the requirements under the Code for qualification and taxation as a REIT. Although we have made such inquiries and performed such investigations as we have deemed necessary to fulfill our professional responsibilities as special tax counsel and nothing has come to our attention which calls into question the accuracy of the facts referred to herein or the representations set forth in the Certificate, we have not undertaken an independent investigation of all of the facts referred to in this opinion letter or the Certificate.

     This opinion letter addresses only the specific federal income tax matters set forth above and does not address any other federal, state, local or foreign tax issues. This opinion letter has been prepared for your use in connection with the Offering, and speaks as of the date hereof. This opinion letter may not be relied upon by any person other than you or for any other purpose without our prior written consent. We assume no obligation by reason of this opinion letter to advise you of any changes in our opinions subsequent to the delivery of this opinion letter but agree to do so from time to time upon specific request from you for an update or confirmation.

     We hereby consent to the filing of this opinion letter with the Commission as an exhibit to the Company’s annual report on Form 10-K, and to the reference to our firm under the heading “Legal Matters” in the Prospectus Supplement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Commission thereunder.

Very truly yours,
 

/s/ Waller Lansden Dortch & Davis, LLP  

EX-10.15

EXHIBIT 10.15

* Portions of this exhibit have been omitted pursuant to a request for confidential treatment and have been filed separately with the Commission.

LOAN APPLICATION AND COMMITMENT AGREEMENT

July 20, 2009

Teachers Insurance and Annuity
     Association of America (the “Lender”)
730 Third Avenue
New York, NY 10017

Re: TIAA Authorization #AAA-6905
Investment ID. #0006731
Property Name: Charlotte Portfolio
Property Addresses: (various);
Mecklenburg County, North Carolina
and York County, South Carolina

Ladies and Gentlemen:

     The undersigned Healthcare Realty Trust Incorporated (the “Applicant”) applies for a loan (the “Loan”) upon the terms and subject to the provisions set forth in this Loan Application and Commitment Agreement (the “Agreement”), on behalf of HR of Carolinas, LLC, a Delaware limited liability company with an address at 3310 West End Avenue, Suite 700, Nashville, Tennessee 37203 (the “Borrower”):

1. LOAN TERMS:

     (a) Loan Amount: $80,000,000.

     (b) Interest Rate:

     (i) 7.25% per annum (the “Fixed Interest Rate”) for the Initial Terra (defined herein); and

     (ii) 400 basis points (i.e., hundredths of 1% per annum) over the one-month LIBOR rate (the “Floating Interest Rats”), but with a floor rate of 7.25% for any Extension Term (defined herein).

     (c) Initial Term: 7 years from the first day of the first calendar month following Closing (defined herein).

     (d) Extension Terms: Borrower shall have the option to extend the Initial Term for two, one-year floating rate Extension Terms in accordance with the provisions contained in Exhibit H-1. For purposes of this Agreement, the “Term” shall mean the Initial Term as it may be extended for one or both of the Extension Terms.

     (e) Repayment Terms: Monthly installments of principal and fixed interest calculated on a 30-year amortization schedule. The Fixed Interest Rate shall be calculated on a 30-day month/360-day year, except that payments for the first and last months of the Term, if such payments pertain to partial months, shall be based upon the actual number of days in such months that the Loan is outstanding and a 365-day or 366-day year, as applicable. The entire outstanding principal balance plus all accrued interest and any

other sums due under the Loan Documents (defined herein) will be due and payable upon the expiration of the Term,

     (f) Optional Prepayment: Borrower, at Borrower’s option, may elect to prepay the Loan in whole, but not in part, on the first day of any calendar month, upon not less than 60 days’ prior written notice to Lender and in accordance with the provisions of Exhibit A; provided, however, that Borrower shall not be permitted to make such a prepayment election during the first 24 months of the Initial Term.

2. CLOSING, CLOSING DATE AND LOAN DISBURSEMENT:

     Upon Acceptance (defined herein), and Borrower’s compliance on or before the date that is 60 days after Acceptance (the “Closing Date”) with all of the provisions of this Agreement, Lender will disburse the Loan Amount at or from Lender’s offices in New York, New York (the “Closing”).

3. SECURITY FOR LOAN:

     The Loan will be secured by a first lien on Borrower’s interests in the land, the improvements (the “Improvements”) and the other real property interests described in Exhibit C, by a first security interest in the personal property and other intangibles described in Exhibit C, by a collateral assignment of the leases affecting, and the rents, issues, profits and revenues arising from, such property, and by the additional collateral, security and security interests, if any, described or referred to in Exhibit C (collectively, the “Property”).

4. LIMITATION OF LIABILITY:

     The Loan will be non-recourse to Borrower except for the carve-outs from non-recourse that are specified in Exhibit G. Borrower will deliver to Lender a Guaranty of Borrower’s recourse obligations under the Loan (the “Carve-Out Guaranty”) at Closing, executed by Applicant (in such capacity, the “Guarantor”).

5. ENVIRONMENTAL INDEMNITY:

     At Closing, Borrower will deliver to Lender an Environmental Indemnity (the “Environmental Indemnity”) executed by Applicant (in such capacity, the “Indemnitor”) in a form reasonably acceptable to Lender.

6. ACCUMULATIONS:

     At Closing and monthly thereafter, Borrower shall, pursuant to an agreement reasonably acceptable to Lender, deposit reserves for taxes and assessments against the Property with Lender or Lender’s designated agent in such amounts as Lender or its designated agent reasonably estimates to be necessary to permit Lender or its designated agent to pay such taxes and assessments as and when they are due during the Term. Any funds remaining in the account upon the expiration of the Term or permitted prepayment of the Loan will be returned to Borrower.

2

7. DEPOSITS, FEES AND EXPENSES:

     (a) Simultaneously with Applicant’s submission of this Agreement, Applicant is delivering to Lender the following fees:

     (i) 1% of the Loan Amount (the “Application Fee”);

     (ii) $140,050 (the “Consultant Fees”) to be used only after Acceptance (unless Applicant gives Lender written authorization for use prior to Acceptance) to pay for the Appraisal, the Environmental and Compliance Reports and the Engineering Reports (all defined in Exhibit G ) together with the attendant inspections (collectively, the “Consultants’ Inspections and Reports”);

     (iii) an administrative fee of $100,000 (the “Administrative Fee”) for Lender’s time and services in preparing this Agreement and in preparing for Closing, which Administrative Fee is deemed earned and nonrefundable upon Applicant’s submission of this Agreement; and

     (iv) a retainer for Lender’s outside counsel legal fees (the “Lender Legal Fees”) incurred or payable in connection with the Loan in the amount of $25,000 (the “Legal Fee Retainer”).

     (b) The Application Fee, the Legal Fee Retainer, and the Letter of Credit (defined herein) or the Additional Cash Deposit (defined herein) are in consideration of Lender’s locking the Fixed Interest Rate and conducting due diligence and analysis of the Loan, all of which Applicant acknowledges to have significant commercial value. If Lender does not accept this Agreement, Lender will return (i) the Application Fee less any reasonable, out-of-pocket expenses (not otherwise stated herein) actually incurred by Lender to date, (ii) the Legal Fee Retainer less any reasonable Lender Legal Fees incurred or payable as of that date, and (iii) the Consultant Fees less any expenses for the Consultants’ Inspections and Reports incurred by Lender pursuant to Applicant’s specific written authorization. After Acceptance, Applicant agrees to pay upon demand, regardless of whether the Loan closes and as an obligation that survives Closing or the expiration or termination of this Agreement, any costs of the Consultants’ Inspections and Reports that exceed the Consultant Fees and any reasonable Lender Legal Fees that exceed the Legal Fee Retainer.

     (c) Within 10 days following Acceptance, Applicant will deliver to Lender either an irrevocable, unconditional letter of credit (the “Letter of Credit”) or, at Applicant’s election, a cash deposit (the “Additional Cash Deposit”) in an amount equal to 1% of the Loan Amount (the Letter of Credit or the Additional Cash Deposit and the Application Fee are referred to collectively as the “Loan Deposit”). The Letter of Credit must be in form reasonably acceptable to Lender, in the required amount in favor of “Teachers Insurance and Annuity Association of America”, irrevocable, expiring no less than 60 days after the Closing Date, issued and payable by a bank approved by Lender, and unconditionally available to Lender by Lender’s drafts, at sight. If the Letter of Credit is not issued and payable by a New York City bank, said Letter of Credit must give Lender the express right to present the original sight draft to the issuing bank by overnight delivery.

3

     (d) Lender is not obligated to pay any brokerage fee or commission or any other premium or charge in connection with this Agreement or with Closing that is based on any agreement or understanding of Applicant or Borrower with a broker, agent or finder. Borrower will indemnify, defend and hold harmless Lender against any claim for such fees, commissions, premiums or charges based on any such agreement or understanding with Applicant or Borrower, regardless of whether Lender accepts this Agreement or the Loan closes. This obligation on the part of Borrower survives Closing or the expiration or termination of this Agreement.

8. ACCEPTANCE PROCEDURE:

     Unless and until Acceptance occurs, this Agreement constitutes Applicant’s offer for Borrower to borrow the Loan Amount from Lender upon the terms and conditions set forth in this Agreement. In consideration of Lender’s engaging in initial due diligence and analysis with respect to the proposed Loan, Applicant agrees that such offer is irrevocable and exclusive for 15 days from the date Lender or its designated servicer or correspondent receives this Agreement executed by Applicant, together with the Consultant Fees, the Application Fee and the Legal Fee Retainer. All prior representations and understandings between Applicant and Lender with respect to Applicant’s offer to borrow are merged into this Agreement, Lender may accept or decline this offer in Lender’s sole discretion. This Agreement is not a binding commitment unless and until Lender accepts this Agreement as provided herein. Unless and until Acceptance occurs, Applicant is obligated only to maintain this Agreement as an irrevocable and exclusive offer for the time specified and to pay the fees, costs and expenses set forth in this Agreement and Lender is obligated only to return such fees as provided herein. If Lender approves Applicant’s application as described in this Agreement, Lender will execute and date this Agreement (the “Acceptance”). Upon Acceptance, this Agreement becomes a binding agreement, enforceable against Applicant and Lender, that obligates Borrower to accept and Lender to make the Loan upon and subject to the provisions contained in this Agreement, which alone sets forth the entire understanding between Applicant and Lender with respect to the Loan. As soon as practicable after Acceptance, Lender will deliver a copy of this Agreement to Applicant.

9. REPRESENTATIONS AND WARRANTIES BY BORROWER:

     Applicant agrees that the following representations and warranties will be correct at Closing, and Borrower will be deemed to repeat and reaffirm the same at Closing:

     (a) Borrower shall have the requisite power and authority under its organizational documents to execute and deliver the Loan Documents, to perform Borrower’s obligations under the Loan Documents and to consummate the transaction contemplated by this Agreement and shall have taken any necessary action to authorize the execution and delivery of the Loan Documents, the performance of Borrower’s obligations under the Loan Documents and the consummation of the transaction contemplated by this Agreement and shall be otherwise in compliance with all applicable Law (defined herein).

     (b) Borrower shall not be an “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”)

4

that is subject to Title I of ERISA or a “plan” as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended, and the related Treasury Regulations (the “Code”) that is subject to Section 4975 of the Code, and the assets of Borrower shall not constitute “plan assets” of one or more such plans for purposes of Title I of ERISA or Section 4975 of the Code.

     (c) Borrower shall not be a “governmental plan” within the meaning of Section 3(32) of ERISA and transactions by or with Borrower shall not be subject to any laws regulating investments of and fiduciary obligations with respect to governmental plans.

     (d) None of Borrower, Guarantor or Indemnitor or any of their respective Affiliates (defined herein) (i) shall be during the Term in violation of any laws relating to terrorist acts, acts of war and money laundering (the “Anti-Terrorism Laws”), or (ii) shall be a “Prohibited Person”as defined under the Anti-Terrorism Laws or will be identified as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website http://www.treas.gov/ofac/tll_sdn.pdf or at any replacement website or official publication of such list (the “OFAC List”). For purposes of this Section 9(d), the term “Affiliate” is defined as any person that controls, is under common control with, or is controlled by the specified person, and the term “control” is defined as the power to direct or cause the direction of the management and policies of the applicable entity through ownership of voting securities or beneficial interests, by contract or otherwise, and persons having control include any general partner, managing member, manager or executive officer of the applicable entity, and any direct or indirect holder of more than 10% of the equity ownership interests of the applicable entity.

     (e) The Loan proceeds will not be used for any illegal purposes and no portion of the Property has been acquired with funds derived from illegal activities. No interest in Borrower shall have been acquired with funds derived from illegal activities.

     (f) Borrower shall covenant and agree to deliver to Lender any certification or other evidence requested from time to time by Lender in its sole discretion, confirming Borrower’s compliance with Anti-Terrorism Laws. The representations and warranties pertaining to Anti-Terrorism Laws and Borrower, Guarantor, Indemnitor or any of their respective Affiliates shall be deemed repeated and reaffirmed by Borrower as of the Closing and as of each date that Borrower makes a payment to Lender under the Loan Documents or receives any payment from Lender.

10. REPRESENTATIONS AND WARRANTIES OF APPLICANT:

     Applicant hereby represents and warrants as follows:

     (a) Applicant has the requisite power and authority under its organizational documents to execute and deliver this Agreement, to perform its obligations under this Agreement and to consummate the transaction contemplated by this Agreement, and has taken any necessary action to authorize the execution and delivery of this Agreement, the performance of its obligations under this Agreement and the consummation of the transaction

5

contemplated by this Agreement and is otherwise in material compliance with applicable Law.

     (b) Applicant is not an “employee benefit plan” as defined in Section 3(3) of ERISA that is subject to Title I of ERISA or a “plan” as defined in Section 4975(e) (1) of the Code which is subject to Section 4975 of the Code, and the assets of Applicant do not constitute “plan assets” of one or more such plans for purposes of Title I of ERISA or Section 4975 of the Code.

     (c) Applicant is not a “governmental plan” within the meaning of Section 3(32) of ERISA and transactions by or with Applicant are not subject to any laws regulating investments of and fiduciary obligations with respect to governmental plans.

     (d) Applicant is not in violation of any Anti-Terrorism Laws, is not a Prohibited Person as defined under the Anti-Terrorism Laws and is not identified as a “specially designated national and blocked person” on the OFAC List.

     (e) The Loan proceeds will not be used for any illegal purposes and no portion of the Property has been acquired with funds derived from illegal activities. To Applicant’s knowledge, no interest in Applicant has been acquired with funds derived from illegal activities.

     (f) Applicant covenants and agrees to deliver to Lender any certification or other evidence requested from time to time by Lender in its sole discretion to confirm Applicant’s compliance with Anti-Terrorism Laws.

11.NOTICES, CONSENTS AND APPROVALS:

     Any notice, demand, consent or approval provided for in this Agreement will be in writing and delivered in accordance with Exhibit F.

12.ADDITIONAL PROVISIONS:

     Additional Loan terms and Closing conditions, if any, applicable to the Loan are set forth in Exhibits G and H.

13. LENDER’S APPROVAL:

     After Acceptance, Lender’s approval of, consent to or satisfaction with any matter referred to in this Agreement will not be unreasonably withheld unless expressly provided otherwise.

14.ASSIGNMENT:

     Applicant will not assign this Agreement without Lender’s prior consent, which may be withheld in Lender’s sole discretion.

6

15. APPLICABLE LAW; JURISDICTION:

     This Agreement is delivered in the State of New York and is intended to be performed in New York and construed in accordance with the laws of New York, except to the extent otherwise set forth in the Loan Documents. All legal proceedings arising out of this Agreement will be litigated in the state or federal courts located in New York, New York and Applicant consents and submits to the jurisdiction of such courts, agrees to institute any litigation arising out of this Agreement in such courts, consents to service of process by mail and waives any right it may have to transfer or change the venue of any litigation brought against Applicant by Lender arising out of this Agreement.

16. AMENDMENTS:

     Before Acceptance, Applicant cannot amend this Agreement except in writing and with Lender’s prior consent, which may be withheld in Lender’s sole discretion. After Acceptance, except as expressly provided herein, this Agreement can only be amended by an Agreement signed by Applicant and Lender. After Acceptance, Lender reserves the right:

     (i) to waive, in whole or in part, any of the provisions benefiting Lender or to extend unilaterally any date or time period prescribed for the performance by Applicant hereunder to enable Applicant to so perform; and

     (ii) to extend unilaterally the Closing Date as Lender, acting in good faith and in a commercially reasonable manner, deems necessary; provided, however, that such extensions of the Closing Date shall not exceed 60 days in the aggregate.

17. RETURN OF LOAN DEPOSIT AND EXCESS CONSULTANT FEES AND EXCESS LEGAL FEE RETAINER UPON CLOSING:

     If the Closing occurs, then Lender shall return to Applicant at Closing the Loan Deposit, any unused Consultant Fees and any unused portion of the Legal Fee Retainer as follows:

     (a) If there are no post-closing requirements to be completed, Lender will refund the Loan Deposit to Applicant, less any sums due to or on behalf of Lender (the “Net Cash Deposit”) at Closing upon Lender’s receipt of Applicant’s original, executed wiring instructions. Lender will also (i) deduct any Lender Legal Fees from the Legal Fee Retainer and then refund any excess portion of Legal Fee Retainer to Applicant at Closing, and (ii) deduct the costs of any of the Consultants’ Inspections and Reports from the Consultant Fees and then refund any excess portion of the Consultant Fees to Applicant at Closing.

     (b) If there are any post-closing requirements to be completed, Lender will retain the portion of the Net Cash Deposit reasonably determined by Lender to be necessary as a reserve for costs (including any additional Lender Legal Fees) that Lender may incur in connection with Borrower’s satisfaction of such post-closing requirements. Upon Borrower’s satisfactory completion of such post-closing requirements, Lender shall promptly refund to

7

Borrower, upon receipt of Borrower’s wiring instructions, such retained portion of the Net Cash Deposit, less any sums due to or on behalf of Lender.

18. TERMINATION:

     (a) Subject to Section 18(b), if Applicant fails to deliver the Letter of Credit or Additional Cash Deposit, as applicable, within 10 days after Acceptance or if Closing does not occur on or before the Closing Date due to Applicant’s failure to comply with the terms of this Agreement, then Lender will have the right to retain, as Lender’s sole and exclusive remedy, the Loan Deposit, which Applicant agrees will be fully earned by Lender as liquidated damages (the “Liquidated Damages”) to compensate Lender in some measure for time spent, services performed, expenses incurred and losses that Lender may incur. Applicant acknowledges that it would be extremely difficult and impractical to ascertain the extent of Lender’s damages caused by failure of the Loan to close, and that the Liquidated Damages represent a reasonable estimate of Lender’s damages and are not a penalty. If any remedy described in this Agreement is denied, Lender may pursue any alternate remedy at law or in equity.

     (b) Notwithstanding the foregoing, if (i) Lender does not approve the Appraisal, (ii) Lender cannot comply with any Law, (iii) provided Applicant has complied with all other terms and conditions of this Agreement, Lender’s approval of the Engineering Report or the Environmental and Compliance Report is conditioned upon remediation of specified conditions, the cost of which exceeds the greater of 2% of the Loan Amount or $1,000,000 in the aggregate (as reasonably determined by Lender), and Applicant has determined not to proceed with the necessary remediation, or (iv) the Closing does not occur on or before the Closing Date for any other reason (including a termination of this Agreement pursuant to Section 20(f) hereof), other than Lender’s willful default or Applicant’s failure to comply with the terms of this Agreement as set forth in Section 18(a), then, in any such event, Lender shall give Applicant notice of same and, upon Applicant’s receipt of such notice, this Agreement shall terminate. Lender’s sole obligation under such circumstances will be to return the Loan Deposit to Applicant, together with (A) the excess of the Consultant Fees over the aggregate actual costs of the Consultants’ Inspections and Reports, and (B) the excess of the Legal Fee Retainer over the reasonable Lender Legal Fees incurred or payable to date, but less any sums due to or on behalf of Lender under this Agreement, including, if such termination is pursuant to clause (iii) above, a breakage fee in the amount of 1% of the Loan Amount.

19. NOMINEE:

     After Acceptance and upon notice to Applicant, Lender may designate a nominee to perform Lender’s obligations under this Agreement and Applicant will cause every item or document which is required under this Agreement to be delivered or assigned to Lender, to name and be delivered or assigned to Lender’s nominee, provided that such designation must occur not later than 10 days prior to Closing and no such designation by Lender shall release or relieve Lender from the performance of the duties and obligations of Lender hereunder.

20. MISCELLANEOUS:

8

     (a) Compliance with the provisions set forth in this Agreement by Applicant and Borrower is a prerequisite to Lender’s making the Loan.

     (b) Applicant and Borrower shall retain all risk of loss with respect to the Property.

     (c) After Acceptance, Lender reserves the right to inspect the Property periodically upon reasonable advance notice to Applicant.

     (d) Any agreement by or duty imposed on Applicant or Borrower in this Agreement to perform any obligation or to refrain from any act or omission constitutes a covenant on its part and includes a covenant by Applicant or Borrower, as the case may be, to cause its partners, members, principals, agents, representatives and employees to perform the obligation or to refrain from the act or omission in accordance with this Agreement. Any statement or disclosure contained in this Agreement about facts or circumstances relating to the Property, Borrower or the Loan constitutes a representation and warranty by Applicant made as of the date of Applicant’s execution of this Agreement.

     (e) Any document, instrument or other writing to be delivered to or to be satisfactory to Lender must be reasonably satisfactory to Lender in both form and content.

     (f) Lender shall not be obligated to close the Loan in the event that there is a “Material Adverse Change”, which shall mean a change that has a material adverse effect upon the use, value or condition of the Property or upon the business, properties, assets, condition (financial or otherwise) or results of operations of Borrower or Applicant. The parties hereto acknowledge that the financial, real estate, banking and/or capital markets are presently subject to a material disruption and that any further deterioration in (or adverse change affecting) any or all of such markets as determined by Lender in its discretion would be deemed to be a Material Adverse Change for all purposes hereunder.

     (g) That certain Confidentiality Letter dated May 7, 2009, between Applicant and TIAA-CREF Global Investments, LLC remains in effect and shall not be modified or affected by the terms of this Agreement. If the Loan does not close, the Confidentiality Letter shall thereafter remain in effect in accordance with its terms. If the Loan closes, the Loan Documents will contain all confidentiality obligations among Lender, Borrower, Guarantor and Indemnitor, and the terms and provisions of the Confidentiality Letter will be merged therein.

21. DEFINITIONS AND RULES OF CONSTRUCTION:

     (a) References in this Agreement to lettered exhibits are references to the Exhibits attached to this Agreement, all of which are incorporated in and constitute a part of this Agreement. References in this Agreement and the Exhibits hereto to numbered sections are references to the sections of this Agreement.

9

     (b) The singular of any word includes the plural and the plural includes the singular. The use of any gender includes all genders.

     (c) No inference in favor of or against any entity with respect to any provision in this Agreement may be drawn from the fact that the entity drafted this Agreement.

     (d) “Certificate” means the sworn, notarized statement of the entity giving the certificate, made by a duly authorized person satisfactory to Lender affirming the truth and accuracy of every statement in the certificate. Any document that is “certified”means the document has been appended to a Certificate of the entity certifying the document which affirms the truth and accuracy of everything in the document being certified.

     (e) The phrase “free from bankruptcy” means free from bankruptcy or reorganization proceedings and from a general assignment for the benefit of creditors.

     (f) The terms “include,” “including” and similar terms are construed as if followed by the phrase “without limitation”.

     (g) The term “Law” means all present and future codes, constitutions, cases, opinions, rules, regulations, laws, orders, ordinances, requirements and statutes, as amended, of any government that affect or that may be interpreted to affect the Property, Borrower or the Loan.

     (h) The term “person” includes a natural person, firm, partnership, limited liability company, corporation and any other public or private legal entity.

     (i) The term “provisions” includes terms, covenants, conditions, agreements and requirements.

22. EXHIBITS:

     Attached to this Agreement are the Exhibits listed below.

Exhibit A — Prepayment Premium; Evasion of Prepayment Premium

Exhibit B — Permitted Future Leasing

Exhibit C — Description of Property

Exhibit D — Schedule of Leases and Leasing Requirements

Exhibit D-1 — Shell Tenants

Exhibit E — Special Purpose Entity Requirements Borrower’s Composition

Exhibit E-1 — Ownership Chart

Exhibit F — Notice

Exhibit G — Closing Conditions

Exhibits H-1 — H-10 — Additional Provisions

10

23. COUNTERPARTS:

     This Agreement may be executed in any number of counterparts and all of the counterparts together will constitute a single original document.

24. APPLICANT’S AGREEMENT:

     This Agreement is executed by Applicant on the date first set forth above. Applicant agrees to be bound by all of the provisions hereof, and each person executing this Agreement on behalf of Applicant represents that (s) he has full authority to bind Applicant.

HEALTHCARE REALTY TRUST INCORPORATED, a Maryland corporation 3310 West End Avenue, Suite 700 Nashville, Tennessee 37203
By:	/s/ Stephen E. Cox, Jr.
	Name:	Stephen E. Cox, Jr.
	Title:	Vice President Applicant’s Taxpayer I.D. No: 62-1507028

25. CONFIRMATION OF FIXED INTEREST RATE:

     The Fixed Interest Rate for the Loan is 7.25% per annum.

[LENDER’S SIGNATURE TO APPEAR ON THE FOLLOWING PAGE]

11

26. LENDER’S ACCEPTANCE:

     This Agreement is accepted by Lender on this day 28^th of July, 2009, and is now a binding contract between Applicant and Lender.

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
By:	/s/ William A. Lane
	Name:	William A. Lane
	Title:	Director

12

EX. A
PREPAY

EXHIBIT A

PREPAYMENT PREMIUM; EVASION OF PREPAYMENT PREMIUM

Prepayment Premium:

     Any prepayment made pursuant to Section 1(f) will include a simultaneous payment of a prepayment premium equal to the amount which is the greater of (a) an amount equal to 1% (the “Prepayment Percentage”) times the amount of the principal of the Loan outstanding on the date of prepayment (the “Prepayment Date Principal”), or (b) the amount by which the sum of the Discounted Values (defined herein) of the Note Payments (defined herein), derived by using the Discount Rate (defined herein), exceeds the Prepayment Date Principal. In order to calculate the sum of the Discounted Values in the foregoing, each remaining Note Payment will be discounted and the resulting Discounted Values will be added together. The Loan may be prepaid without premium during the last 120 days of the Term.

Evasion of Prepayment Premium:

     If, at any time during the Term, the Loan is accelerated after an event of default or there is any prepayment not permitted by the Loan Documents, then any tender of payment of the amount necessary to satisfy the entire Loan, any judgment of foreclosure, any sum due at foreclosure and any tender of payment during any redemption period will include, to the extent permitted by Law, an amount (the “Evasion of Prepayment Premium”) which is the greater of (a) an amount equal to the Prepayment Percentage plus 300 basis points times the Prepayment Date Principal, or (b) the amount by which the sum of the Discounted Values of the Note Payments, derived by using the Default Discount Rate (defined herein), exceeds the Prepayment Date Principal. In order to calculate the sum of the Discounted Values in the foregoing, each remaining Note Payment will be discounted and the resulting Discounted Values will be added together.

Defined Terms:

     (a) “Discount Rate” means the annual yield on a U.S. Treasury issue selected by Lender (or such other commonly used benchmark as Lender selects in its reasonable discretion, if Lender determines that U.S. Treasury issues are not commonly used as benchmarks on the date of calculation), as reported by Bloomberg.com (or in any similar national financial newspaper, periodical or website designated by Lender if Bloomberg.com is not available), two weeks prior to prepayment, having a maturity date corresponding (or most closely corresponding, if not identical) to the last day of the then-existing Term, and, if applicable, a coupon rate corresponding (or most closely corresponding, if not identical) to the Fixed Interest Rate.

     (b) “Default Discount Rate” means the Discount Rate less 300 basis points.

A-1

     (c) “Discounted Value” means the Discounted Value of a Note Payment based on the following formula:

NP
(1 + R/12)D	=	Discounted Value

NP	=	Amount of Note Payment.
R	=	Discount Rate or Default Discount Rate as the case may be.
n	=	The number of months between the date of prepayment and the scheduled date of the Note Payment in question rounded to the nearest integer.

     (d) “Note Payments” means (i) each of the scheduled payments of monthly debt service on the Loan for the period from the first day of the month subsequent to the date of prepayment through the end of the then-existing Term and (ii) the scheduled repayment of principal, if any, at the end of the Term.

A-2

EX. B
LEASING

EXHIBIT B

PERMITTED FUTURE LEASING

     The Loan Documents will permit Borrower to enter into leases without Lender’s prior consent, provided that there is no event of default under the Loan Documents then continuing, the terms of the lease are consistent with generally prevailing market terms in the geographic region in which the Property is located, and the lease either is written on a Lender-approved form of lease or is submitted with Lender’s standard form of subordination, non-disturbance and attornment agreement executed by the tenant thereunder.

     If the Debt Service Coverage (defined herein) for the Loan declines below 1.30x, Lender reserves the right to revoke, upon 60 days’ notice, Borrower’s privilege to enter into new leases without Lender’s consent.

     The Loan Documents will require Borrower to obtain. Lender’s prior consent to (a) any new lease of 20,000 square feet or more of interior space within the Improvements, and/or (b) any new lease representing 10% or more of the gross revenues or of the net rentable area of the Property.

     Lender agrees to use best efforts to respond to requests for new lease approvals within 10 business days of notice thereof. No additional fee shall be due to Lender in connection with any request for Lender’s consent to a lease, provided that Borrower shall agree to reimburse Lender for reasonable legal fees incurred by Lender in responding to such request in an amount not to exceed $1,000 per request.

     Borrower will deliver to Lender an original or certified copy of each new lease, together with a reasonably detailed lease abstract, within 30 days after execution of the lease.

     The term “Debt Service Coverage” shall mean the Net Operating Income (defined herein) of the Property for the 12 months ending as of the end of the mostly recently ended fiscal quarter of Borrower divided by the amount of scheduled monthly debt service payments over such period. The term “Net Operating Income” shall mean the gross revenues derived from the Property after payment of annual insurance premiums, taxes and assessments and operating expenses of the Property (including ground rent if any). “Operating expenses of the Property” shall not include interest expense, income taxes, depreciation, amortization, capital costs (including tenant improvements), extraordinary expenses, and out-of-period revenue or expense adjustments.

B-1

EX. C
PROPERTY

EXHIBIT C

DESCRIPTION OF PROPERTY

Location: See attached Property Summary.

Land: See attached Property Summary.

Improvements: See attached Property Summary.

Title: Leasehold as to Land and Improvements by virtue of one or more ground leases (and/or ground subleases, as applicable). Additional provisions relating to the leasehold estate(s) are set forth in Exhibit H.

Personal Property: Borrower’s interest in any personal property located on the land or in the Improvements and essential to the operation and enjoyment of the Property including furniture, furnishings, equipment, appliances, accounts receivable, general intangibles, licenses, permits and the like.

Additional Collateral: Borrower’s interest in any operating agreements, reciprocal easement agreements, management agreements and other material agreements affecting the Property. In addition, Borrower’s interest in all reserve accounts required by this Agreement and any additional security, collateral or credit enhancements described in Exhibit H, if any.

C-1

CHARLOTTE PORTFOLIO PROPERTY SUMMARY

Number

Ground

GL

Year Built/

of

Square

Current

Lease

Renewal

Property

Address

City

State

Renovated

Ownership

Tenants

Footage

Occupancy

Expiration

Options

CMC Morrocroft I

4501 Cameron Valley Parkway

Charlotte

NC

1995/2008

Ground Lease

4

33,675

*

12/31/2084

2 terms of 10 years

CMC Morrocroft II

4525 Cameron Valley Parkway

Charlotte

NC

2007

Ground Lease

13

132,155

*

12/31/2084

2 terms of 10 years

CMC Pineville Medical Plaza

10650 Park Road

Pineville

NC

2008

Ground Lease

14

105,291

*

12/31/2084

2 terms of 10 years

CMC Building 400

10620 Park Road

Pineville

NC

1987/2007

Ground Lease

12

32,857

*

12/31/2084

2 terms of 10 years

CMC 10502 Park Road

10502 Park Road

Pineville

NC

1996

Ground Lease

5

15,102

*

12/31/2084

2 terms of 10 years

CMC 10508 Park Road

10508 Park Road

Pineville

NC

1994

Ground Lease

5

13,543

*

12/31/2084

2 terms of 10 years

CMC 10516 Park Road

10516 Park Road

Pineville

NC

1994

Ground Lease

1

7,200

*

12/31/2084

2 terms of 10 years

CMC 10520 Park Road

10520 Park Road

Pineville

NC

1993/2007

Ground Lease

3

13,400

*

12/31/2084

2 terms of 10 years

CMC University Medical Park

101 East W.T. Harris Boulevard

Charlotte

NC

1984/1992- 1994

Ground Lease

18

166,298

*

12/31/2084

2 terms of 10 years

CMC Myers Park

1350 South Kings Drive

Charlotte

NC

1961/1984

Ground Lease

1

107,882

*

12/31/2084

2 terms of 10 years

CMC 1010 Edgehill Road

1010 Edgehill Road North

Charlotte

NC

1983/2006

Ground Lease

1

16,818

*

12/31/2084

2 terms of 10 years

CMC 1023 Edgehill Road

1023 Edgehill Road South

Charlotte

NC

1976/2006

Ground Lease

4

16,869

*

12/31/2084

2 terms of 10 years

CMC 1628 East Morehead Street

1628 East Morehead Street

Charlotte

NC

1973/2006

Ground Lease

1

5,775

*

12/31/2084

2 terms of 10 years

CMC Fort Mill Medical Plaza

704 Gold Hill Road

Fort Mill

SC

2008

Ground Lease

8

39,801

*

12/31/2084

2 terms of 10 years

CMC Mint Hill Medical Plaza

10545 Blair Road

Mint Hill

NC

2007

Ground Lease

9

57,580

*

12/31/2084

2 terms of 10 years

Total 15

764,246

91.5

%

C-2

EX. D
LEASES

EXHIBIT D

SCHEDULE OF LEASES AND LEASING REQUIREMENTS

     In addition to the other provisions in this Agreement, it is a condition to Closing that the leasing described below is in effect at Closing, with tenants satisfactory to Lender in physical occupancy (except for those “shell” tenants listed in Exhibit D-1) that are paying rent and free from bankruptcy. Such leasing represents the minimum leasing required for Borrower to qualify for the Loan.

     In addition to the other provisions in this Agreement, the conditions to Closing include the following: (i) not less than 91.5% of the leasing on the attached rent roll shall be in effect at Closing with tenants in physical occupancy (except for those “shell” tenants listed in Exhibit D-1), paying rent and free from bankruptcy, and (ii) the Property shall have a minimum projected annual Net Operating Income of $10,400,000 and Debt Service Coverage as of the Closing of at least 1.58x.

     Applicant represents and warrants that, on the date on which Applicant has executed this Agreement, all existing leases of space within the Improvements are listed on the rent roll attached to this Agreement, which rent roll includes the square footage, commencement date, expiration date, current rent and future rent (if such future rent is subject to a set increase) for each tenant and a summary of each tenant’s operating expense reimbursement. Notwithstanding the foregoing, Applicant agrees that it shall, within 15 business days after Acceptance, provide to Lender a summary of any tenant purchase options, early lease termination options and lease renewal options.

D-1

RENT ROLL

Entity id	Building	Total		Leased		Occupancy
CHS101	Morrocroft I		33,675		*		*
CHS102	Morrocroft II		132,155		*		*
CHS103	Pineville		105,291		*		*
CHS104	Building 400		32,857		*		*
CHS105	10502 Park		15,102		*		*
CHS106	10508 Park		13,543		*		*
CHS107	10516 Park		7,200		*		*
CHS108	10520 Park		13,400		*		*
CHS109	University		166,298		*		*
CHS110	Myers Park		107,882		*		*
CHS111	1010 Edgehill		16,818		*		*
CHS112	1023 Edgehill 1628		16,869		*		*
CHS113	Morehead		5,775		*		*
CHS114 .	Fort Mill		39,801		*		*
CHS115	Mint Hill		57,580		*		*
Total			764,246		699,520		91.5	%

D-2

Morrocroft 1

Tenant Rent Roll

Base Year/

Update on

Lease

Annual

Expense

Expired Leases/

Lease Start

Expiration

Leased

Annual Base

Other

Expense

Rent

Stop

Leases Expiring

Suite

Tenant

Date

Date

Sq. Ft.

Rent PSF

Income

Reimbursement

Escalations

$ Amount

Gross Up

before 10/31/09

100

CHS — Charlotte Pediatric Clinic

1/01/09

12/31/18

13,601

*

*

*

125

*

*

*

*

*

*

*

200

CHS Leased/Unoccupied

1/01/09

12/31/18

8,287

*

*

*

300

CHS Leased/Unoccupied

1/01/09

12/31/18

11,594

*

*

*

Total Sq Ft (1)

33,675

Occupied Sq Ft (1)

*

Occupancy %(1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-3

Morrocroft II

Tenant Rent Roll

Base Year/

Update on

Lease

Annual

Expense

Expired Leases/

Lease Start

Expiration

Leased

Annual Base

Other

Expense

Rent

Stop

Leases Expiring

Suite

Tenant

Date

Date

Sq. Ft.

Rent PSF

Income

Reimbursement

Escalations

$ Amount

Gross Up

before 10/31/09

1000

*

*

*

*

*

*

*

1200

CHS Morrocroft Pharmacy

01/01/09

12/31/23

2,375

*

*

*

1300

CHS Leased/Unoccupied

01/01/09

12/31/23

4,471

*

*

*

1400

CHS-Conf Room

01/01/09

12/31/23

1,052

*

*

*

1500

CHS — Urgent Care

01/01/09

12/31/23

4,713

*

*

*

1600

CHS — CPN-multi-tenant

01/01/09

12/31/23

1,226

*

*

*

1700

CHS — Lab Network

01/01/09

12/31/23

1,101

*

*

*

2000

CHS — CMC-MMG Morrocroft

01/01/09

12/31/23

82,988

*

*

*

2200

CHS Leased/Unoccupied

01/01/09

12/31/23

5,712

*

*

*

2500

CHS — CPN-Charlotte OB/GYN

01/01/09

12/31/23

10,636

*

*

*

3200

CHS Leased/Unoccupied

01/01/09

12/31/23

4,895

*

*

*

999 (2)

Leased/Unoccupied

—

—

(103

)

—

—

—

Total Sq Ft (1)

132,155

Occupied Sq Ft (1)

*

Occupancy % (1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-4

Pineville Medical Plaza

Tenant Rent Roll

Base Year/

Update on

Lease

Annual

Expense

Expired Leases/

Lease Start

Expiration

Leased

Annual Base

Other

Expense

Rent

Stop

Leases Expiring

Suite

Tenant

Date

Date

Sq. Ft.

Rent PSF

Income

Reimbursement

Escalations

$ Amount

Gross Up

before 10/31/09

120

*

*

*

*

*

*

*

140

CHS — Pharmacy

1/01/09

12/31/23

973

*

*

*

160

CHS — Blumenthal Cancer Center

1/01/09

12/31/23

10,144

*

*

*

200

Vacant

—

—

3,978

*

*

*

220

CHS — Sanger Clinic

1/01/09

12/31/23

15,708

*

*

*

240

CHS — Lab/Draw Station

1/01/09

12/31/23

988

*

*

*

250

Vacant

—

—

2,935

*

*

*

280

CHS — Burn-Off

1/01/09

12/31/18

5,956

*

*

*

300

Vacant

—

—

5,603

*

*

*

310

*

*

*

*

*

*

*

320

Vacant

—

—

1,137

*

*

*

325

Vacant

—

—

1,540

*

*

*

340

CHS — Burn-Off

1/01/09

12/31/18

4,433

*

*

*

360

CHS — Burn-Off

1/01/09

12/31/18

3,410

*

*

*

370

CHS — Burn-Off

1/01/09

12/31/18

2,841

*

*

*

380

CHS — Burn-Off

1/01/09

12/31/18

2,841

*

*

*

400

CHS — Burn-Off

1/01/09

12/31/18

2,273

*

*

*

420

CHS — MMG

1/01/09

12/31/23

20,823

*

*

*

460

CHS —Administration

1/01/09

12/31/23

2,101

*

*

*

D-5

Base Year/

Update on

Lease

Annual

Expense

Expired Leases/

Lease Start

Expiration

Leased

Annual Base

Other

Expense

Rent

Stop

Leases Expiring

Suite

Tenant

Date

Date

Sq. Ft.

Rent PSF

Income

Reimbursement

Escalations

$ Amount

Gross Up

before 10/31/09

480

Vacant

—

—

2,144

—

—

—

999 (2)

Leased/Unoccupied

—

—

(3,877

)

—

—

—

Total Sq Ft (1)

105,291

Occupied Sq Ft (1)

*

Occupancy % (1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-6

Building 400

Tenant Rent Roll

Base Year/

Update on

Lease

Annual

Annual

Expense

Expired Leases/

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

Leases Expiring

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

Amount

Up

before 10/31/09

102/8/210

*

*

*

*

*

*

*

112

CHS — CMC Pineville Admin

1/01/09

12/31/15

7,300

*

*

*

126

CHS — Maternity Educ.

1/01/09

12/31/15

1,212

*

*

*

128

*

*

*

*

*

*

*

202

CHS — Lactation Support

1/01/09

12/31/15

1,200

*

*

*

206

CHS — CMC Pineville Admin

1/01/09

12/31/15

1,794

*

*

*

208

Charlotte Radiology

1/01/08

12/31/09

3f509

*

*

*

218

CHS — CMC Pineville

1/01/09

12/31/15

2,426

*

*

*

222

CHS — Carolines Rehab

1/01/09

12/31/15

3,105

*

*

*

228

CHS — CMC Pineville Admin

1/01/09

12/31/09

1,717

*

*

*

230

*

*

*

*

*

*

*

234

CHS — CMC Pineville Admin

1/01/09

12/31/15

1,858

*

*

*

Total Sq Ft (1)

32,857

Occupied Sq Ft (1)

*

Occupancy %(1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-7

10502 Park Road

Tenant Rent Roll

Base Year/

Update on

Lease

Annual

Annual

Expense

Expired Leases/

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

Leases Expiring

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

before 10/31/09

100

Vacant

—

—

3,800

—

*

*

110

*

*

*

*

*

*

*

120

*

*

*

*

*

*

*

150

CHS — Southeastern Pain

01/01/09

12/31/15

4,418

*

*

*

170

*

01/01/09

01/31/10

1,659

*

*

*

Total Sq Ft (1)

15,102

Occupied Sq Ft (1)

*

Occupancy % (1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-9

10508 Park Road

Tenant Rent Roll

Base Year/

Update on

Lease

Annual

Annual

Expense

Expired Leases/

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

Leases Expiring

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

before 10/31/09

100

*

*

*

*

*

*

*

I20A

Vacant

—

—

779

—

*

*

I20B

Vacant

—

—

843

—

*

*

130

*

*

*

*

*

*

*

140

HRS Management Office

1/03/09

12/31/23

2,294

*

*

Total Sq Ft (1)

13,543

Occupied Sq Ft (1)

*

Occupancy %(1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-10

10516 Park Road

Tenant Rent Roll

Base Year/

Update on

Lease

Annual

Annual

Expense

Expired Leases/

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

Leases Expiring

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

before 10/31/09

100

*

*

*

*

*

*

Total Sq Ft (1)

7,200

Occupied Sq Ft (1)

*

Occupancy %(1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-11

10520 Park Road

Tenant Rent Roll

Base Year/

Update on

Lease

Annual

Annual

Expense

Expired Leases/

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

Leases Expiration

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

Before 10/31/09

100

*

*

*

*

*

*

*

102

*

*

*

*

*

*

*

105

*

*

*

*

*

*

*

Total Sq Ft (1)

13,400

Occupied Sq Ft (1)

*

Occupancy %(1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-12

University Medical Park

Tenant Rent Roll

Lease

Annual

Annual

Base Year/

Update on Expired Leases/

Lease Start

Expiration

Base Rent

Other

Expense

Rent

Expense Stop

Gross

Leases Expiring

Suite

Tenant

Date

Date

Leased Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

before 10/31/09

1110

*

*

*

*

*

*

*

1121/1115

CHS — University Peds

01/01/09

12/31/11

11,430

*

*

*

1210

Vacant

—

—

1,014

*

*

*

1211

CHS — Telemedicine

01/01/09

12/31/18

585

*

*

*

1212

*

*

*

*

*

*

*

1213

CHS — Sanger Clinic

01/01/09

12/31/18

4,731

*

*

*

1216

CHS — Carolinas Hema/Onco

01/01/09

12/31/18

6,090

*

*

*

2122

CHS — Diagnostic Ctr

01/01/09

12/31/18

693

*

*

*

2122A/B

*

*

*

*

*

*

*

2221

*

*

*

*

*

*

*

2223

*

*

*

*

*

*

*

2224

Vacant

—

—

541

*

*

*

2320

CHS — Grtr Car. Women’s Ctr

01/01/09

12/31/18

7,296

*

*

*

3110

CHS-Neurology

01/01/09

12/31/15

1,274

*

*

*

3111

*

*

*

*

*

*

*

3111A

Vacant

—

—

748

*

*

*

3215

*

*

*

*

*

*

*

3301

CHS — Harrisburg Family Practice

01/01/09

12/31/11

6,998

*

*

*

4001

Vacant

—

—

3,385

*

*

*

4002

Vacant

—

—

1,056

*

*

*

D-13

Lease

Annual

Annual

Base Year/

Update on Expired Leases/

Lease Start

Expiration

Base Rent

Other

Expense

Rent

Expense Stop

Gross

Leases Expiring

Suite

Tenant

Date

Date

Leased Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

before 10/31/09

4003

Vacant

—

—

2,747

*

*

*

4101

CHS — N. Mecklenburg HR

01/01/09

12/31/18

3,436

*

*

*

4102

CHS — Carolinas Lab Network

01/01/09

03/31/18

1,136

*

*

*

4104

*

*

*

*

*

*

*

4106

Vacant

—

—

1,502

*

*

*

5001

*

*

*

*

*

*

*

5002

CHS — N. Charlotte Med. Special

01/01/09

12/31/11

4,920

*

*

*

5003

CHS — N. Charlotte Med. Special

01/01/09

12/31/11

1,916

*

*

*

5004

CHS — N. Charlotte Med. Special

01/01/09

12/31/11

1,959

*

*

*

5100

Vacant

—

—

2,679

*

*

*

5101

Vacant

—

—

4,377

*

*

*

5102

Vacant

—

—

2,374

*

*

*

5103

Vacant

—

—

8,855

*

*

*

5104

Vacant

—

—

1,086

*

*

*

5201

*

*

*

*

*

*

*

5202

Vacant

—

—

3,405

*

*

*

5203

Vacant

—

—

5,607

*

*

*

5301

CHS — Eastover OB/GYN

01/01/09

12/31/18

13,334

*

*

*

5303s

Vacant

—

—

570

*

*

*

5304

CHS — Outpatient Therapy

01/01/09

12/31/18

6,009

*

*

*

Bsmnt 1

CHS — UH X-ray Storage

01/01/09

12/31/15

1,053

*

*

*

Bsmnt 2

Vacant

—

—

879

*

*

*

Bsmnt 3

Vacant

—

—

157

*

*

*

CAGE1

Vacant

—

—

186

*

*

*

CAGE 2 & 4

Vacant

—

—

366

*

*

*

D-14

Lease

Annual

Annual

Base Year/

Update on Expired Leases/

Lease Start

Expiration

Base Rent

Other

Expense

Rent

Expense Stop

Gross

Leases Expiring

Suite

Tenant

Date

Date

Leased Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

before 10/31/09

CAGE03

CHS — EastoverOB/GYN

01/01/09

12/31/09

186

*

*

*

CAGE05

CHS — Volunteer Svcs

01/01/09

12/31/09

189

*

*

*

CAGE06

Vacant

—

—

194

*

*

*

CAGE07

CHS — Disgnostic Ctr.

01/01/09

12/31/09

192

*

*

*

CAGE08

*

*

*

*

*

*

*

CAGE09

Vacant

—

—

35

*

*

*

CAGE 10

CHS — N. Charlotte Med Special

01/01/09

12/31/10

192

*

*

*

CAGE 11

CHS — Sanger Clinic

01/01/09

12/31/10

171

*

*

*

CAGE 12

Vacant

—

—

101

*

*

*

CAGE 13

Vacant

—

—

103

*

*

*

999 (2)

Leased/Unoccupied

—

—

3,569

*

*

*

Total Sq Ft (1)

166,298

Occupied Sq Ft (1)

*

Occupancy % (1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-15

Myers Park

Tenant Rent Roll

Base Year/

Update on

Lease

Annual

Expense

Expired Leases/

Lease Start

Expiration

Leased

Annual Base

Other

Expense

Rent

Stop

Leases Expiring

Suite

Tenant

Date

Date

Sq.ft.

Rent PSF

Income

Reimbursement

Escalations

$ Amount

Gross Up

before 10/31/09

All

CHS — Myers Park

01/01/09

12/31/18

107,882

*

*

*

Total Sq Ft (1)

107,882

Occupied Sq Ft (1)

*

Occupancy % (1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-16

1010 Edgehill

Tenant Rent Roll

Base Year/

Update on

Lease

Annual

Expense

Expired Leases/

Lease Start

Expiration

Leased

Annual Base

Other

Expense

Rent

Stop

Leases Expiring

Suite

Tenant

Date

Date

Sq.ft.

Rent PSF

Income

Reimbursement

Escalations

$ Amount

Gross Up

before 10/31/09

100

CHS — Neuroscience

01/01/09

12/31/22

16,818

*

*

*

Total Sq Ft (1)

16,818

Occupied Sq Ft (1)

*

Occupancy % (1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-17

1023 Edgehill

Tenant Rent Roll

Base Year/

Update on

Lease

Annual

Expense

Expired Leases/

Lease Start

Expiration

Leased

Annual Base

Other

Expense

Rent

Stop

Leases Expiring

Suite

Tenant

Date

Date

Sq.ft.

Rent PSF

Income

Reimbursement

Escalations

$ Amount

Gross Up

before 10/31/09

100

CHS — McKay Urology

1/01/09

12/31/18

14,207

*

*

*

125

CHS — Dept of Research

1/01/09

12/31/18

853

*

*

*

150

CHS — Dept of Urology

1/01/09

12/31/18

743

*

*

*

150B

CHS-Dept of Urology

1/01/09

12/31/18

1,066

*

*

*

Total Sq Ft (1)

16,869

Occupied Sq Ft (1)

*

Occupancy % (1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-18

1628 Morehead

Tenant Rent Roll

Base Year/

Update on

Lease

Annual

Expense

Expired Leases/

Lease Start

Expiration

Leased

Annual Base

Other

Expense

Rent

Stop

Leases Expiring

Suite

Tenant

Date

Date

Sq.ft.

Rent PSF

Income

Reimbursement

Escalations

$ Amount

Gross Up

before 10/31/09

BLDG

CHS

1/01/09

12/31/18

5,775

*

*

*

Total Sq Ft (1)

5,775

Occupied Sq Ft (1)

*

Occupancy % (1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-19

Fort Mill

Tenant Rent Roll

Base Year/

Update on

Lease

Annual

Expense

Expired Leases/

Lease Start

Expiration

Leased

Annual Base

Other

Expense

Rent

Stop

Leases Expiring

Suite

Tenant

Date

Date

Sq.ft.

Rent PSF

Income

Reimbursement

Escalations

$ Amount

Gross Up

before 10/31/09

1000

CHS — Pharmacy

1/01/09

12/31/23

1,089

*

*

*

1100

CHS — Shiland Family Practice

1/01/09

12/31/23

8,204

*

*

*

1200

CHS — Urgent Care

1/01/09

12/31/23

5,754

*

*

*

1300

CHS — Sanger Clinic

1/01/09

12/31/23

4,236

*

*

*

2000

CHS Lease/ Unoccupied

1/01/09

12/31/23

2,760

*

*

*

2100

CHS — Rock Hill Pediatric Assc.

1/01/09

12/31/23

8,181

*

*

*

2200

CHS — Piedmont GYN/OB

1/01/09

12/31/23

7,910

*

*

*

2300

CHS — Time Share

1/01/09

12/31/23

1,667

*

*

*

Total Sq Ft (1)

39,801

Occupied Sq Ft (1)

*

Occupancy % (1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-20

Mint Hill

Tenant Rent Roll

Base Year/

Update on

Lease

Annual

Expense

Expired Leases/

Lease Start

Expiration

Leased

Annual Base

Other

Expense

Rent

Stop

Leases Expiring

Suite

Tenant

Date

Date

Sq.ft.

Rent PSF

Income

Reimbursement

Escalations

$ Amount

Gross Up

before 10/31/09

100

CHS — Urgent Care

1/01/09

12/31/23

5,345

*

*

*

101

CHS — Leased/ Unoccupied

1/01/09

12/31/23

5,866

*

*

*

104

CHS — Multi Tenant Speciality

1/01/09

12/31/23

1,396

*

*

*

106

CHS Leased/ Unoccupied

1/01/09

12/31/23

5,867

*

*

*

200

CHS Lease/ Unoccupied

1/01/09

12/31/23

6,145

*

*

*

201

CHS — Charlotte Medical Specialties

1/01/09

12/31/23

13,464

*

*

*

300

CHS Leased/ Unoccupied

1/01/09

12/31/23

3,719

*

*

*

301

CHS — Greater Carolinas Womens Center

1/01/09

12/31/23

9,491

*

*

*

302

CHS — University Pediatrics

1/01/09

12/31/23

6,287

*

*

*

Total Sq Ft (1)

57,580

Occupied Sq Ft (l)

*

Occupancy % (1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-21

EX. D-1
SHELL TENANTS

EXHIBIT D — l

SCHEDULE OF “SHELL” TENANTS

Property	Suite #		RSF		Tenant	Expiration Date
Morrocroft I (CHS101)		200		8,287	CMHA	12/31/2018
		300		11,594	CMHA	12/31/2018
Morrocroft II (CHS102)		1300		4,471	CMHA	12/31/2023
		2200		5,712	CMHA	12/31/2023
		3200		4,895	CMHA	12/31/2023
PMP (CHS103)	Burnoff			21,754	CMHA/Mercy/Foundation	12/31/2018
Fort Mill (CHS114)		2000		2,760	CMHA	12/31/2023
Mint Hill (CHS115)		101		5,866	CMHA	12/31/2023
		106		5,867	CMHA	12/31/2023
		200		6,145	CMHA	12/31/2023
		300		3,719	CMHA	12/31/2023

D-1-1

EX. E
COMPOSITION

EXHIBIT E

SPECIAL PURPOSE ENTITY REQUIREMENTS/BORROWER’S COMPOSITION

     Applicant agrees that the following will be correct at Closing, and Borrower will recertify the following at Closing:

     (a) Borrower is and will continue to be a Single Purpose Entity and if Borrower is a general partnership, each of Borrower’s general partners is and will continue to be a corporation, limited partnership or limited liability company which is a Single Purpose Entity. “Single Purpose Entity” means an entity whose organizational documents set forth single purpose entity covenants satisfactory to Lender, in its sole discretion, including covenants that the entity:

     (i) is formed solely for the purpose of owning, managing and operating the Property and is not engaged and will not engage, either directly or indirectly, in any business other than the ownership, management and operation of the Property;

     (ii) does not have and will not acquire or use any assets other than the Property and personal property incidental to the business of owning, managing and operating the Property and activities incidental thereto; without limiting the foregoing, the Property shall be operated as a single property or project, generating substantially all of Borrower’s gross income, it being the intent that the Property shall constitute “single asset real estate” for purposes of Section 362(d)(3) of the Bankruptcy Code;

     (iii) will not liquidate or dissolve (or suffer any liquidation or dissolution), or enter into any transaction of merger or consolidation, or acquire by purchase or otherwise all or substantially all the business or assets of, or any stock or other evidence of beneficial ownership of, any entity;

     (iv) will not, nor will any partner, limited or general, member or shareholder thereof, as applicable, violate the terms of its partnership certificate, partnership agreement, articles of incorporation, bylaws, operating agreement, articles of organization or other formation agreement or document, as applicable;

     (v) will observe, if it is a limited liability company, all limited liability company formalities that relate to the entity’s separateness pursuant to its formation documents, operating agreement, bylaws or partnership agreement (as the case may be), or any other organizational filing or document governing its affairs;

     (i) has not and will not guarantee, pledge its assets for the benefit of, or otherwise become obligated for, the obligations of any other person or hold out its credit or assets as being available to satisfy the obligations of any other person except for obligations for

E-1

indemnification and other obligations of Borrower pursuant to its operating agreement, bylaws or partnership agreement, as applicable;

     (vii) has not incurred and will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (A) the Loan and (B) unsecured trade debt incurred in the ordinary course of business (not evidenced by a note) and paid in the ordinary course of business in connection with owning, operating and maintaining the Property, provided that such indebtedness is paid within 90 days of when incurred (unless the claim for such indebtedness is disputed in good faith and cash reserves are maintained therefor during the period of such dispute which would be sufficient to discharge fully such indebtedness);

     (viii) will be and will at all times hold itself out to the public as a legal entity separate and distinct from any other entity (including, without limitation, any affiliate (defined herein), general partner or member, as applicable, or any affiliate of any of its general partners or members, as applicable), will correct any known misunderstanding concerning its separate identity, and will not identify any other entity (including, without limitation, any affiliate, general partner or member, or any affiliate of any of its general partners or members, as applicable) as a division or part of it;

     (ix) subject to the management of the Property by a property manager using a single operating account and to the commingling of reserves and other funds held by Lender as required under the Loan Documents, will not commingle its funds or assets with those of any other person, and will maintain and account for its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any other person;

     (x) will maintain its own separate, complete and accurate accounts, books, records and financial statements complying with GAAP, provided that it may file or may be part of a consolidated federal tax return to the extent required or permitted by applicable Law so long as there is an appropriate notation indicating its separate existence and its assets and liabilities;

     (xii) will pay its obligations and expenses from its own funds and assets (to the extent that it has funds to do so);

     (xiii) will not have any paid manager or director for the entity (other than the Independent Manager (defined herein)) and, to the extent it has any employees, it will pay the salaries of its own employees from its own funds and in the absence of such paid employees, it will obtain all necessary services through third parties or independent contractors;

E-2

          (xiv) will conduct and operate business in its own name or in the name of the Property, will allocate fairly and reasonably any overhead for shared office space and use separate stationary, invoices and checks;

          (xv) will not enter into or be a party to any transaction with any of its general partners, principals, affiliates or members, as applicable, or any affiliate of any of its general partners, principals or members, except in the ordinary course of business and upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arms-length basis with a third party other than an affiliate;

          (xvi) rwill not make loans or advance credit to any person (including affiliates) other than to tenants of the Property in the form of tenant allowances or tenant improvements, provided that this covenant shall not preclude such entity from amending or modifying the financial terms of leases for the Property pursuant to lease amendments or modifications completed in accordance with the provisions of the Loan Documents;

          (xvii) will not take any action which, under the terms of its formation document or other applicable organizational documents, requires the unanimous consent of all directors, partners or members, as applicable, without such required vote;

          (xviii) will not engage in, seek or consent to any dissolution, winding up, liquidation, consolidation, merger, asset sale, bankruptcy or insolvency filing, or material amendment to or modification (including any amendments or modifications of its separateness covenants) of its partnership agreement, articles of incorporation, bylaws, operating agreement, articles of organization or other formation agreement or document, as applicable, without the required written consent of Lender;

          (xix) will continue to operate its business with the goal of maintaining capital which is adequate for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations, to the extent funds are available from the Property; and

          (xx) will not fail at any time to have at least one Independent Manager that will vote on material matters affecting it, which matters shall include (a) any proposed insolvency or bankruptcy proceeding of such entity, (b) incurring indebtedness outside the ordinary course of business, (c) any merger or consolidation of it with any other entity, (d) any dissolution or liquidation of such entity, and (e) any amendment or modification of any provision of its organizational documents relating to company purpose, title to or management of the Property, its bankruptcy-remote status, and/or the admission or removal of general partners or members, as the case may be, provided that no

E-3

termination or change of the Independent Manager shall be made without giving Lender at least 20 days’ prior written notice, which notice shall include a copy of any bio-profile or resume of such replacement Independent Manager.

Borrower shall agree to keep the Single Purpose Entity covenants set forth in this paragraph (a) and such covenants will be included in the Loan Documents and shall be, at the time of the Closing, included in Borrower’s organizational documents.

     As used herein, the term “Independent Manager” shall mean a duly appointed member of the board of directors or board of managers who is provided by a nationally-recognized company that provides professional independent directors/managers who shall not have been at the time of initial appointment or at any time while serving as an Independent Manager, and may not have been at any time during the preceding five years, (i) a stockholder, director, officer, employee, partner, attorney or counsel of Borrower or any affiliate of Borrower, (ii) a customer, supplier or other person who derives any of its purchases or revenues from its activities with such entity or any affiliate of Borrower, (iii) a person controlling or under common control with any such stockholder, partner, customer, supplier or other person, or (iv) a member of the immediate family of any such stockholder, director, officer, employee, partner, customer, supplier or other person. For purposes of this Exhibit E, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a person, whether through ownership of voting securities, by contract or otherwise, and the term “affiliate” means for the specified person: (1) any person directly or indirectly owning, controlling or holding with power to vote 20% or more of the outstanding voting securities or interests of such specified person; (2) any person 10% or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote by such specified person; (3) any person directly or indirectly controlling, controlled by or under common control with such specified person; (4) any officer, director or partner of such specified person; (5) if such specified person is an officer, director or partner, any entity for which such person or entity acts in any such capacity; and (6) any close relative or spouse of such specified person if an individual.

     If Borrower is a single-member limited liability company, then such limited liability company must be duly organized and in good standing under the laws of Delaware.

     (b) Borrower shall be duly organized and in good standing and qualified to do business in the state where the Property is located. Applicant will, prior to the Closing, transfer the Property to Borrower if Borrower is not currently the owner thereof.

     (c) Attached hereto as Exhibit E-1 is an Ownership Chart prepared by Applicant that shows Borrower’s proposed ownership structure, including the name, state of formation and type of entity of Borrower and each of

E-4

Borrower’s constituents and their respective percentage interests in Borrower, and showing the complete form of signature block for Borrower, including the name and title of its authorized representative.

     (d) Applicant will deliver to Lender no later than 20 days before Closing, all applicable organizational documents of Borrower and its constituents and of Applicant, and will identify all owners of 10% or more of direct or indirect ownership interests in Borrower, the percentage interest of each such owner, and Borrower’s taxpayer identification number and address if different from Applicant’s as indicated in Section 24. After Lender’s approval, none of the foregoing may be amended without Lender’s consent.

     (e) The Ownership Chart and all organizational documents and information delivered or to be delivered to Lender are correct and complete, and Borrower shall be deemed to have recertified the same as of the Closing Date.

E-5

EX. E-1
OWNERSHIP CHART

EXHIBIT E — 1

OWNERSHIP CHART

E-1-1

HR OF CAROLINAS, LLC, a Delaware limited liability company
By:
	Title:

Authorized Representatives:

David R. Emery—President and Chief Executive Officer

B. Douglas Whitman, II—Executive Vice President and Chief Operating Officer

Scott W. Holmes—Executive Vice President and Chief Financial Officer

John M, Bryant, Jr.—Executive Vice Present and General Counsel

Todd J. Meredith—Senior Vice President—Real Estate Investments

Brince R. Wilford—Senior Vice President—Real Estate Investments

Julie A. Wilson—Senior Vice President

Frederick M. Langreck—Senior Vice President, Treasurer and Assistant Secretary

James C. Douglas—Vice President—Asset Administration

Stephen E. Cox, Jr.—Vice President and Assistant General Counsel

Andrew E. Loope—Vice President and Corporate Counsel

Rita H. Todd—Secretary

E-1-2

EX. F
NOTICE

EXHIBIT F

NOTICE

All acceptances, approvals, consents, demands, notices, requests and other communications (the “Notices”) required or permitted to be given under this Agreement must be in writing and sent by certified mail, return receipt requested, or by nationally recognized overnight delivery service that provides evidence of the date of delivery, with all charges prepaid (for next business day delivery if sent by overnight delivery service), addressed to the appropriate party at its address listed below:

If to Applicant or Borrower:	Healthcare Realty Trust Incorporated 3310 West End Avenue, Suite 700 Nashville, Tennessee 37203 Attn: James C. Douglas
with courtesy copies to:	Healthcare Realty Trust Incorporated 3310 West End Avenue, Suite 700 Nashville, Tennessee 37203 Attn: General Counsel
	and
	Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C. 211 Commerce Street, Suite 1000 Nashville, Tennessee 37201 Attn: David J. White
If to Lender:	Teachers Insurance and Annuity Association 730 Third Avenue New York, New York 10017 Attn: Director, Global Private           Markets, Portfolio Management TIAA Authorization #AAA-6905 Investment ID. #0006731
with courtesy copies to:	Teachers Insurance and Annuity Association 730 Third Avenue New York, New York 10017 Attn: Associate General Counsel and           Director, Asset Management Law TIAA Authorization #AAA-6905 Investment ID. #0006731

F-1

and

Teachers Insurance and Annuity Association
8500 Andrew Carnegie Boulevard
Mailstop: 8500N-C2-07

Charlotte, North Carolina 28262
Attn: Nicole Brovet Cantu

Lender and Applicant each may change the address to which Notices must be sent, by notice given in accordance with the provisions of this Exhibit F. All Notices given in accordance with the provisions of this Exhibit F will be deemed to have been received upon the date of receipt if sent by certified mail, or one business day after having been deposited with a nationally recognised overnight delivery service if sent by overnight delivery. Notwithstanding the foregoing, any Notice sent to the last designated address of any person to which it is required to be sent pursuant to this Agreement shall not be deemed ineffective if actual delivery cannot be made due to a change of address of the person to which the Notice is directed or the refusal of such person to accept delivery thereof.

F-2

EX. G
CLOSING CONDITIONS

EXHIBIT G

CLOSING CONDITIONS

     Lender’s obligation to make the Loan is subject to timely satisfaction of the conditions set forth below:

     1. Applicant shall have delivered (or caused Borrower or title company to deliver) to Lender the following items relating to the Property as soon as practicable after Acceptance and a reasonable period of time prior to Closing but in all cases in accordance with any time period specifically set forth below, all items to be reasonably satisfactory to Lender (and Applicant acknowledges that Acceptance does not constitute Lender’s approval of any items delivered to Lender prior to Acceptance):

     (a) originals or certified copies of all operating agreements, ground leases and ground subleases affecting the Property to which Applicant or any of its affiliates is a party (including, without limitation, any master ground lease or other ground lease affecting the Property), and copies of reciprocal easement agreements, management agreements, material agreements all non-residential leases, including leases described or referred to in Exhibit D, together with any short form leases, amendments, addenda, exhibits, lease guarantees or assignments relating thereto, and as soon as practicable after execution, copies of all non-residential leases or other material agreements affecting the Property executed after the initial delivery of leases and other material agreements hereunder. After Lender’s approval, none of the foregoing may be amended without Lender’s prior consent;

     (b) two copies of the standard proposed form lease for the Property, which may not be amended in any material respect after approval by Lender;

     (c) final plans and specifications for the Improvements described in Exhibit C for any portion of the Improvements that is in Seismic Zone 3 or 4;

     (d) a current title report or binder (including the fee underlying any leasehold estate), a search of appropriate UCC records, and, at Closing, an ALTA Loan Title Insurance Policy with such coinsurance, reinsurance and endorsements as Lender deems necessary issued by a title insurance company approved by Lender and excluding any creditors’ rights exceptions or exclusions;

     (e) a current ALTA as-built survey certified to Lender;

     (f) a pro forma certification of the rent roll verifying information about the leases affecting the Property (to be revised as necessary with new or amended information arising after the pro forma was prepared), certified by Borrower no more than 15 days and not less than 5 days before Closing, which rent roll shall include (i) the square footage, commencement date, expiration date, current rent and future rent (if such future rent is subject to a set increase), (ii) a summary of each tenant’s lease provision(s) for

G-1

reimbursement of operating expenses, real estate taxes and insurance premiums, and (iii) a summary of any tenant purchase options, early lease termination options and lease renewal options;

     (g) not less than 30 days before Closing, an original or certified copy of insurance policies and evidence of payment of the insurance premium for full replacement cost of the Improvements and Personal Property referred to in Exhibit C (without deduction for depreciation), which insurance will include fire and sprinkler leakage, extended coverage, vandalism, malicious mischief, boiler and machinery, terrorism coverage, windstorm, earthquake and flood insurance (if located in earthquake or flood zones), a minimum of 12 months of rent loss insurance, and such other kinds of insurance as may be required by Lender in its sole discretion, premiums prepaid, issued by companies and in amounts reasonably satisfactory to Lender, with a standard mortgagee endorsement in Lender’s favor for the property insurance, an additional insured endorsement in Lender’s favor for liability insurance and a waiver of subrogation endorsement, where applicable;

     (h) an original or certified copy of the unconditional certificate of occupancy or other unconditional certificate of appropriate governmental authorities evidencing compliance with all zoning, building and applicable regulations, and an original or certified copy of any other consents, permits, licenses, approvals and franchises referred to in paragraph 5 of this Exhibit G;

     (i) not more than 30 days and not less than 5 days before Closing, (1) original tenant estoppel certificates dated not more than 30 days before Closing from tenant Carolina Health Systems (“CHS”) and any additional tenants such that the total square footage covered by all received estoppels equals or exceeds at least 75% of the total leased area of the Property, as shown on the attached rent roll, and (2) an original tenant estoppel certificate dated not more than 30 days before Closing for each non-residential lease affecting the Property under which the tenant thereunder leases not less than 20,000 square feet of interior space within the Improvements and an original subordination, non-disturbance and attornment agreement for each non-residential lease affecting the Property under which the tenant thereunder leases not less than 20,000 square feet of interior space within the Improvements and designated by Lender in its sole discretion;

     (j) a certified inventory of Personal Property included in the Property;

     (k) to the extent the Property is composed of one or more separate tax parcels, copies of receipted tax and assessment bills for the current tax year and for the previous tax year for such tax parcels;

     (l) a form of opinion prepared by counsel satisfactory to Lender covering such legal matters as Lender deems reasonably appropriate, including due authorization, due execution, enforceability, usury or choice of law, and

G-2

due organization and good standing of Borrower, with the original to be signed, dated and delivered to Lender at Closing;

     (m) year-to-date operating statements for the Property for the fiscal year in which Closing occurs and operating statements for the Property for the prior fiscal year; capital and operating budgets for the Property for the remainder of the fiscal year in which Closing occurs and for the next succeeding fiscal year; and such other financial information covering operations of the Property and the financial condition of Borrower, Borrower’s constituent entities and Applicant as Lender may reasonably request;

     (n) standard UCC, bankruptcy, state and federal tax lien, and pending litigation/judgment searches for (i) Borrower, (ii) Applicant, and (iii) the Property Manager (if affiliated with Borrower or Applicant);

     (o) not less than 5 business days before Closing, ground lessor estoppel and agreements in form and substance reasonably acceptable to Lender from any fee owners (or ground sublessors, as applicable) of the Property; and

     (p) from time to time before Closing, such other documentation or information as Lender may reasonably request in connection with Closing.

     2. In the event that the terms of any operating agreements, ground leases, reciprocal easement agreements, management agreements and other material agreements affecting the Property entitle Borrower to request an estoppel certificate concerning the status or effectiveness of or compliance with the terms and conditions of any such instrument (individually, an “REA Estoppel Certificate”) and Lender so requests any such REA Estoppel Certificate prior to Closing, Borrower shall use its good faith efforts to obtain any such REA Estoppel Certificate prior to Closing in the form and from the parties prescribed by such instrument (or, in the event no such form is prescribed, in a form reasonably acceptable to Lender).

     3. The leasing requirements set forth in Exhibit D shall have been satisfied.

     4. Borrower shall have executed and delivered to Lender documents satisfactory to Lender (the “Loan Documents”) evidencing and securing the Loan and any other obligations of Borrower set forth in this Agreement, which will include provisions substantially in the form of the following:

     (a) late charges of 5% of any late payment; a default interest rate of 5% per annum over the Fixed Interest Rate; the Evasion of Prepayment Premium described in Exhibit A, payable upon repayment of the Loan after an event of default or upon any other prepayment not permitted by the Loan Documents; and provisions for payment of reasonable fees relating to actions of Lender requested by Borrower under the Loan Documents;

G-3

     (b) a 5-day grace period for monetary defaults; and a 30-day grace period after notice for non-monetary defaults which will be extended as necessary for non-monetary defaults not susceptible of cure within 30 days, if Borrower commences to cure within the 30-day period, diligently prosecutes the cure to completion and the entire grace period for a non-monetary default does not exceed 120 days;

     (c) conditions to Borrower’s right to enter into leases affecting the Property without Lender’s consent, which conditions are more particularly described in Exhibit B;

     (d) requirements to deliver to Lender quarterly and annual financial statements for the Property (and for annual financial statements for Borrower and Guarantor/Indemnitor upon request) and such other financial information as Lender may reasonably request from time to time. The financial statements (which shall include partial fiscal years) shall be certified by Borrower and may be unaudited, except that following an event of default, the annual financial statements will be audited and accompanied by a satisfactory opinion from a CPA approved by Lender;

     (e) a requirement to deliver to Lender quarterly and annual certifications of the rent roll for the Property, certified by Borrower, verifying information about all leases affecting the Property and verifying Borrower’s compliance with the provisions of the Loan Documents relating to leasing;

     (f) subject to paragraphs 4(g) and 4(h) of this Exhibit G, prohibitions on prior or subordinate liens and encumbrances against the Property or any interest in the Property and on certain direct or indirect sales, assignments, pledges or other transfers of the Property or any estate or interest therein without Lender’s prior written consent which may be withheld in Lender’s sole and absolute discretion, it being understood that prohibited transfers include (A) direct or indirect changes (by operation of law or otherwise and including mergers) in the identity or composition of Borrower or a change in control (as defined in Exhibit E) of Borrower and (B) pledges of stock or of partnership or membership interests, as the case may be, in Borrower, provided that any change in control of Guarantor or Indemnitor shall not constitute a change in control of Borrower while the equity securities of Guarantor or Indemnitor are listed on a public securities exchange or the over-the-counter market;

     (g) a one-time sale of the Property will be permitted, subject to the following conditions: (i) Lender’s approval of the transferee, which must have a net worth of at least $400 million and must be an institutional investor or developer with a reputation and experience comparable to those of Applicant at Closing; (ii) transferee’s express assumption of Borrower’s obligations under the Loan Documents and with respect to the Property; (iii) Lender’s approval in its sole discretion of a substitute guarantor and substitute indemnitor, and delivery of substitute guaranty and indemnity instruments in substantially the forms provided to Lender at Closing; (iv) satisfaction of the conditions set forth in paragraph 4 (h) of this Exhibit G;

G-4

(v) Lender’s receipt of satisfactory evidence that, immediately prior to the transfer and at least 12 months subsequent to the transfer, the Property supports a loan to value ratio no greater than 55%, with value to be determined by the purchase price of the Property pursuant to an executed purchase and sale agreement with a bona fide third party purchaser, and a Debt Service Coverage of not less than 1.58x; and (vi) payment of a transfer and assumption fee in the amount of 1% of the outstanding principal balance of the Loan;

     (h) the following conditions under which transfers of the membership interests in Borrower will be permitted, subject to there being no change in control (as defined in Exhibit E) of Borrower or the Property:

     (i) Lender shall have received prior notice;

     (ii) there shall then be no existing default under the Loan Documents and all of Borrower’s payment obligations to Lender shall have been satisfied through the date of transfer;

     (iii) Borrower shall have paid Lender’s costs (including legal fees and expenses) and a processing fee relating to the transfer;

     (iv) the transfer shall not cause an ERISA violation;

     (v) the property manager of the Property shall be satisfactory to Lender;

     (vi) the transferee (including substitute guarantor or indemnitor) shall be domiciled in the United States and/or is a citizen of the United States, shall not be a “specifically designated national and blocked person” on the OFAC List and otherwise shall not be in violation of any Anti-Terrorism Laws, shall not have had adversarial dealings with Lender or had a monetary default under any other investment with Lender, shall not have been found guilty of criminal charges, and shall be free from bankruptcy;

     (vii) prior to the transfer, Borrower shall have provided Lender with a Uniform Commercial Code search report satisfactory to Lender relating to the transferee; and

     (viii) prior to the transfer, Borrower shall have delivered to Lender a certification as to all of the foregoing matters executed by an entity satisfactory to Lender, together with such evidence to confirm the accuracy of such certification as Lender may reasonably request;

     (i) carve-outs from the non-recourse limitation on liability, which are set forth in Exhibit H-6;

G-5

     (j) such covenants, warranties, representations and agreements of Borrower, Lender, the administrator of the Deposit Account (defined herein) and a depositary institution as are required to satisfy the lock-box requirements set forth in Exhibit H-7; and

     (k) a requirement that any termination fee paid to Borrower in excess of $250,000 in connection with any lease termination shall be paid to Lender and used to reimburse Borrower for tenant improvement costs and leasing commissions associated with the affected leased premises (provided certain conditions are met); provided, however that upon an event of default under the Loan Documents, any and all lease termination fees (regardless of the amount) shall be paid to Lender and used to reimburse Borrower for tenant improvement costs and leasing commissions associated with the affected leased premises.

     5. Except for permitted transfers of interests in Borrower, Borrower’s composition shall continue to be the same as set forth in Exhibit E, and the representations and warranties contained therein shall be true, correct and complete as of the Closing Date.

     6. Lender shall have received evidence satisfactory to Lender that (i) the Property shall be in material compliance with all applicable Law, including those relating to construction, land use, health, safety and environmental matters and (ii) all permits, licenses, approvals and franchises required for the construction, use, operation, occupancy and management of the Property have been obtained and are in good standing and Borrower has complied with any specific conditions or requirements applicable to the Property.

     7. Lender shall have received and approved the following Consultants’ Inspections and Reports relating to the Property:

(a) a current appraisal (the “Appraisal”) prepared by an appraiser (the “Appraiser”) engaged by Lender in accordance with Lender’s scope of work. The Appraisal must support a loan to value ratio not to exceed 55%;

(b) a report (the “Engineering Report”), prepared by an independent engineer (the “Engineering Consultant”) engaged by Lender, in accordance with Lender’s scope of work. Applicant agrees to provide the Engineering Consultant with a copy of any soils investigation report with respect to the Property in Applicant’s possession. The Engineering Report will be based on a physical inspection of the Improvements and review of the final plans and specifications of the Improvements (to the extent they are required to be provided hereunder); and

(c) Environmental assessment and compliance reports (the “Environmental and Compliance Report”) prepared by an independent

G-6

expert (the “Environmental Consultant”) engaged by Lender in accordance with Lender’s scope of work.

Applicant will cooperate and use reasonable efforts to cause its tenants, its property manager and other third parties with an interest in or information about the Property to cooperate with the consultants in their investigations. Lender agrees to provide Borrower with copies of the Consultants’ Inspections and Reports within 10 days after Closing. Neither Lender nor any of the consultants will have any liability or responsibility to Borrower with respect to the Consultants’ Inspections and Reports.

     8. Borrower and all of Borrower’s members shall be (i) free from bankruptcy and (ii) solvent, as determined by Lender in its sole discretion, both in that the value of their respective assets exceeds their respective liabilities and that it is likely that they will be able to pay their debts, including, where applicable, payments required by the Loan Documents, as they become due in the foreseeable future.

     9. Lender shall have approved all legal matters.

Notwithstanding the requirements of this Exhibit G for the delivery of information and other materials, Applicant and Borrower may satisfy their delivery obligations under this Exhibit G for all or part of the information and other materials to be delivered by providing Lender with the addresses of one or more Internet web sites at which such information and other materials may be accessed by Lender.

G-7

EX. H
ADDITIONAL PROVISIONS

EXHIBIT H

ADDITIONAL PROVISIONS

The attached Exhibits H-1 through H-10 constitute the additional provisions applicable to the Loan.

Index

1.	Extension Terms	H-1
2.	Correspondent Authority and Fee Arrangement	H-2
3.	Cross Collateralization	H-3
4.	Ground Lease/Ground Sublease Terms	H-4
5.	Insurance Proceeds and Condemnation Awards for Restoration — Conditions to Use	H-5
6.	Limitation of Liability	H-6
7.	Mortgage/Deed of Trust Provisions	H-6A
8.	Lock-Box Requirements	H-7
9.	Allocated Loan Amounts	H-8
10.	Release Provisions — Partial Release	H-9
11.	Substitution of Collateral	H-10

H-1

EX. H-1
LOAN EXTENSION PROVISIONS

EXHIBIT H — 1

EXTENSION TERMS

     First Extension: At any time between the 78^th and 83^rd month of the Initial Term and provided (i) no event of default exists under the Loan, (ii) the Debt Service Coverage at the Property is at least 1.65x, (iii) the loan to value ratio is not greater than 55%, and (iv) Borrower pays an extension fee in the amount of .50% of the then-current outstanding principal amount of the Loan, Borrower will have the option to extend the Initial Term for an additional 12-month extension term (the “First Extension”), subject to the following: the First Extension will on a floating rate basis, priced at 400 basis points over the 1 - month LIBOR rate with a minimum coupon of 7.25% and will be amortized on a 30-year schedule.

     Second Extension: At any time between the 10^th and 11^th month of the First Extension and provided (i) no event of default exists under the Loan, (ii) the Debt Service Coverage at the Property is at least 1.65x, (iii) the loan to value ratio is not greater than 55%, and (iv) Borrower pays an extension fee in the amount of .50% of the then-current outstanding principal amount of the Loan, Borrower will have the option to extend the then-existing Term for an additional 12-month extension term (the “Second Extension”) on the same terms and conditions as the First Extension.

     Prepayment during either the First Extension or the Second Extension will be subject to the provisions of Section l(f) and Exhibit A.

     In the event the Term is extended for either the First Extension or the Second Extension, Lender will require Borrower to purchase an interest rate cap from a “AA” rated counterparty and in a form reasonably acceptable to Lender. The interest rate cap will be required at the first day of each extension and shall cover the ensuing 12 months of such extension. The interest rate cap shall be at a rate that will provide for a minimum 1.65x Debt Service Coverage at the Property and such interest rate cap shall be assigned to Lender. The LIBOR rate cap required shall be calculated by Lender based on the lower of actual Net Operating Income of the Property for the preceding 12-month period and budgeted Net Operating Income for the ensuing 12-month period.

H-1-1

EX. H-2
CORRESPONDENT

EXHIBIT H — 2

CORRESPONDENT AUTHORITY AND FEE ARRANGEMENT

     Lender has retained Holliday Fenoglio Fowler, L.P. (the “Correspondent”) to originate and obtain applications for mortgage loans for consideration by Lender. Correspondent has been retained solely as an independent contractor and will not be considered or construed under any circumstances to be an agent of Lender. Applicant understands and agrees that Correspondent has no authority to accept or execute this Agreement on behalf of Lender and that all representations, documents and understandings between Applicant and Correspondent with respect to Applicant’s offer for Borrower to borrow are merged into this Agreement. Separate and apart from this Agreement, Applicant and Correspondent have entered into an agreement that provides for Applicant to pay to Correspondent a brokerage fee or commission in connection with the Loan and, notwithstanding the merger provision contained in the preceding sentence, such agreement is not merged into this Agreement.

     Applicant further acknowledges and agrees that Lender may have a separate compensation arrangement with Correspondent pursuant to which payments may be made by Lender to Correspondent or other compensation earned by Correspondent based on various factors. Such factors may, among other things, include the volume of new loan originations done by Correspondent with Lender (which may include the Loan or other loans made by Lender to other borrowers), the amount of loans serviced by Correspondent for Lender (which may include servicing of the Loan as well as other loans made by Lender to other borrowers), the scope of services and duties performed as part of the servicing performed by Correspondent over the Term, or the existence of a sub-servicing arrangement in connection with the Loan. Such compensation paid by Lender to Correspondent will be in addition to any fees paid to Correspondent by Applicant or Borrower.

H-2-1

EX. H-3
CROSS COLLATERALIZATION

EXHIBIT H — 3

CROSS COLLATERALIZATION

     The Loan Documents will contain cross-collateralization, cross-prepayment and cross-default provisions satisfactory to Lender_, subject to the terms of and limitations imposed by the ground leases described in Exhibit H-4. Lender may, at Lender’s option, determine that multiple notes, guarantees and/or mortgages are required to document the Loan, and Borrower will execute such notes, guarantees and mortgages. The Loan Documents will provide that if an event of default occurs under any one of the notes and/or guarantees or under any one of the mortgages securing the notes and/or guarantees or under any of the other Loan Documents, such event of default will also constitute an event of default under the other notes and/or guarantees and mortgages and Lender will be entitled to exercise its remedies under all of the notes and/or guarantees, mortgages and other Loan Documents, including to foreclose upon all of the properties comprising the Property.

H-3-1

EX. H-4
GROUND LEASE TERMS

EXHIBIT H — 4

GROUND LEASE / GROUND SUBLEASE TERMS

Ground Leases / Ground Subleases:

     Certain provisions of the ground leases (or ground subleases, as applicable) that currently govern the terms of the leasehold interests comprising part of the Property are set forth in the schedule attached to this Exhibit H-4.

Ground Lessor / Ground Sublessor Agreements with Lender:

     As a condition to Closing, Borrower will deliver to Lender a document in recordable form executed by each ground lessor (and/or ground sublessor, as applicable) and reasonably satisfactory to Lender which confirms, among other things, (a) that Lender shall have the right to receive copies of all notices of default sent under the ground lease (and/or ground sublease, as applicable) and shall have the opportunity to cure said defaults (including an additional cure period in the event ground lessee (and/or ground sublessee) fails to cure any default which gives rise to a right to terminate the ground lease (or ground sublease, as applicable), (b) that such ground lessor (and/or ground sublessor) will enter into a new ground lease (or ground sublease) or leases with Lender if the ground lease (or ground sublease) with such ground lessor (or ground sublessor) is terminated at any time during the term thereof for any reason, including rejection of such ground lease (or ground sublease) in a bankruptcy proceeding, and/or (c) that Lender shall have the right of prior review and approval of any amendment, cancellation or termination of the ground lease (or ground sublease) provided that such separate document shall not be required in the event the ground lease (or ground sublease) expressly extends and provides such rights to Lender.

H-4-1

GROUND LEASE / GROUND SUBLEASE SCHEDULE

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease: Ground Lease Agreement (the “Lease”) between The Charlotte-Mecklenburg Hospital Authority (the “Landlord”) and HR of Carolinas, LLC (the “Tenant”), dated as of December 29, 2008

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	10508 Park Road, Pineville, North Carolina
Expiration Date	December 31, 2083.
Renewals	Two ten-year Extension Periods
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	Tenant owns Improvements, subject to reversionary interest of Landlord.
Transfer of Leasehold Interest	•     Transfers do not include: (1)   Space Leases or subleases not otherwise prohibited;
	(2)   A Change in Ownership of Tenant or its Affiliate;
	(3)   The Transfer of an Interest, in whole or in part, to an Affiliate of Tenant;
	(4)    The conveyance of an ownership interest in Tenant to the Investment Entity pursuant to the Side Letter Agreement;
	(5)    A conveyance of any ownership interest in the Investment Entity to any Person and by any Person; or
	(6)   The granting of a Leasehold Mortgage or any foreclosure or deed-in-lieu resulting therefrom or any conveyance to a purchaser at a foreclosure sale or deed-in-lieu thereof pursuant to a Leasehold Mortgage.
	•    Landlord’s consent is not required for an assignment to (i) an Affiliate of Tenant, (ii) a Qualified Person, or (iii) an Investment Entity.
	•     Landlord has a Right of First Offer on all Available Space for lease.
	•     Landlord has a Right of First Refusal on all Available Space for lease.
	•     Landlord has a Repurchase Right prior to the sale of any Interest by Tenant.

H-4-2

Lease Provision	Summary
	•     Except as a result of a Change of Ownership of Tenant’s corporate parent, and except to the extent of ownership interests in Tenant held by Investors or the Investment Entity, for a period of seven (7) years following the Lease Effective Date, neither Tenant nor any Affiliate of Tenant shall, within the boundaries of the county in which the Building is located, either:
	(1)   Own, construct, or develop any improvements located on any land owned or controlled by *; or
	(2)   Hold an equity interest in any property or development in which * also holds an equity interest.
Summary of Rights of Mortgagee	•     Any Leasehold Mortgagee must be either a qualified source meeting criteria acceptable to Landlord, including criteria relating to financial worth, stability, reputation and being a Qualified Person or an Institutional Lender.
	•     Insurance companies, public pension funds and retirement funds with a net worth of $50,000,000 or more are included in the definition of Institutional Lender.
	•     Tenant has the right to finance or refinance any debt secured by a Leasehold Mortgage so long as:
	(1)   the term of such financing does not extend beyond the Lease Expiration Date;
	(2)   the aggregate debt incurred in such financing does not exceed 90% of the appraised fair market value of Tenant’s Leasehold Estate;
	(3)    there is no mortgage balance at the end of the Lease Term; and
	(4)    such Leasehold Mortgage is subject to the terms of the Lease and subordinate to the rights of Landlord.
	•     Subject and subordinate to the Leasehold Mortgage, Tenant’s rights to all rent under the Space Leases are collaterally assigned to Landlord.
	•     Under no circumstances shall Landlord subordinate its interests in the Premises to the lien of any Leasehold Mortgagee.
	•     The Leasehold Mortgage must expressly prohibit the Leasehold Mortgagee from naming Landlord as a party in any foreclosure or other action relating to the Leasehold Mortgage or seeking a judgment against Landlord based upon the Leasehold Mortgage or any related instrument or document.
	•     Landlord will permit a Leasehold Mortgage to include the following terms:
	(1)   Any notice, demand, election or other communication that would adversely affect the Leasehold Mortgage from Landlord to Tenant must be delivered simultaneously to Leasehold Mortgagee.
	(2)   Leasehold Mortgagee has the right to cure any Default by Tenant within 45 days following receipt of Default Notice (or, if the Default cannot be cured within such 45-day period, Leasehold Mortgagee has promptly initiated the

H-4-3

Lease Provision	Summary
	cure and diligently and continuously pursues it to completion).
	(3)    Landlord cannot exercise its remedies against Tenant so long as Leasehold Mortgagee (i) commences foreclosure of its lien on Tenant’s Leasehold Estate within 70 days after Leasehold Mortgagee’s receipt of the Default Notice, (ii) completes such foreclosure with reasonable diligence, and (iii) pays upon demand all amounts owing under the Lease.
	(4)    Alternatively, following an uncured event of Default by Tenant, Landlord may elect (i) to assume and agree to pay the outstanding balance owing under the loan documents as and when such balance becomes due and payable (together with any applicable penalty, premium, yield maintenance fee, assumption fee or other cost or expense), or (ii) to acquire from Leasehold Mortgagee the Leasehold Mortgage and Promissory Note for the unpaid balance thereof plus non-delinquent accrued interest (without late fees or charges for Default, but including any applicable prepayment penalty, premium or other charge, cost or expense).
	(5)    If the Lease is terminated by Tenant in bankruptcy or following a Tenant Default, Landlord will, after request provided in accordance with the Lease, enter into a new lease for the Premises with the Leasehold Mortgagee for the remainder of the Lease Term, without warranty of possession or quiet enjoyment by Landlord, and subject to the payment of all amounts due under the Lease.
	(6)    Foreclosure of a Leasehold Mortgage does not require Landlord consent, and upon such foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.
	(7)   A Leasehold Mortgage shall not be deemed to constitute an assignment or Transfer by Tenant.
Attornment	Landlord will permit a Leasehold Mortgage to provide that, upon foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.

H-4-4

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease: Ground Lease Agreement (the “Lease”) between The Charlotte-Mecklenburg Hospital Authority (the “Landlord”) and HR of Carolinas, LLC (the “Tenant”), dated as of December 29, 2008

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	10502 Park Road, Pineville, North Carolina
Expiration Date Renewals	December 31, 2083 Two ten-year Extension Periods
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	Tenant owns Improvements, subject to reversionary interest of Landlord.
Transfer of Leasehold Interest	•     Transfers do not include:
	(1)   Space Leases or subleases not otherwise prohibited;
	(2)   A Change in Ownership of Tenant or its Affiliate;
	(3)   The Transfer of an Interest, in whole or in part, to an Affiliate of Tenant;
	(4)   The conveyance of an ownership interest in Tenant to the Investment Entity pursuant to the Side Letter Agreement;
	(5)   A conveyance of any ownership interest in the Investment Entity to any Person and by any Person; or
	(6)   The granting of a Leasehold Mortgage or any foreclosure or deed-in-lieu resulting therefrom or any conveyance to a purchaser at a foreclosure sale or deed-in-lieu thereof pursuant to a Leasehold Mortgage.
	•     Landlord’s consent is not required for an assignment to (i) an Affiliate of Tenant, (ii) a Qualified Person, or (iii) an Investment Entity.
	•     Landlord has a Right of First Offer on all Available Space for lease.
	•     Landlord has a Right of First Refusal on all Available Space for lease.
	•     Landlord has a Repurchase Right prior to the sale of any Interest by Tenant.
	•     Except as a result of a Change of Ownership of Tenant’s corporate parent, and except to the extent of ownership

H-4-5

Lease Provision	Summary
	interests in Tenant held by Investors or the Investment Entity, for a period of seven (7) years following the Lease Effective Date, neither Tenant nor any Affiliate of Tenant shall, within the boundaries of the county in which the Building is located, either:
	(1)   Own, construct, or develop any improvements located on any land owned or controlled by *; or
	(2)   Hold an equity interest in any property or development in which * also holds an equity interest.
Summary of Rights of Mortgagee	•    Any Leasehold Mortgagee must be either a qualified source meeting criteria acceptable to Landlord, including criteria relating to financial worth, stability, reputation and being a Qualified Person or an Institutional Lender.
	•     Insurance companies, public pension funds and retirement funds with a net worth of $50,000,000 or more are included in the definition of Institutional Lender.
	•     Tenant has the right to finance or refinance any debt secured by a Leasehold Mortgage so long as:
	(1)   the term of such financing does not extend beyond the Lease Expiration Date;
	(2)   the aggregate debt incurred in such financing does not exceed 90% of the appraised fair market value of Tenant’s Leasehold Estate;
	(3)    there is no mortgage balance at the end of the Lease Term; and
	(4)    such Leasehold Mortgage is subject to the terms of the Lease and subordinate to the rights of Landlord.
	•     Subject and subordinate to the Leasehold Mortgage, Tenant’s rights to all rent under the Space Leases are collaterally assigned to Landlord.
	•     Under no circumstances shall Landlord subordinate its interests in the Premises to the lien of any Leasehold Mortgagee.
	•     The Leasehold Mortgage must expressly prohibit the Leasehold Mortgagee from naming Landlord as a party in any foreclosure or other action relating to the Leasehold Mortgage or seeking a judgment against Landlord based upon the Leasehold Mortgage or any related instrument or document.
	•     Landlord will permit a Leasehold Mortgage to include the following terms:
	(1)   Any notice, demand, election or other communication that would adversely affect the Leasehold Mortgage from Landlord to Tenant must be delivered simultaneously to Leasehold Mortgagee.
	(2)   Leasehold Mortgagee has the right to cure any Default by Tenant within 45 days following receipt of Default Notice (or, if the Default cannot be cured within such 45-day period, Leasehold Mortgagee has promptly initiated the cure and diligently and continuously pursues it to completion).

H-4-6

Lease Provision	Summary
	(3)    Landlord cannot exercise its remedies against Tenant so long as Leasehold Mortgagee (i) commences foreclosure of its lien on Tenant’s Leasehold Estate within 70 days after Leasehold Mortgagee’s receipt of the Default Notice, (ii) completes such foreclosure with reasonable diligence, and (iii) pays upon demand all amounts owing under the Lease.
	(4)    Alternatively, following an uncured event of Default by Tenant, Landlord may elect (i) to assume and agree to pay the outstanding balance owing under the loan documents as and when such balance becomes due and payable (together with any applicable penalty, premium, yield maintenance fee, assumption fee or other cost or expense), or (ii) to acquire from Leasehold Mortgagee the Leasehold Mortgage and Promissory Note for the unpaid balance thereof plus non-delinquent accrued interest (without late fees or charges for Default, but including any applicable prepayment penalty, premium or other charge, cost or expense).
	(5)    If the Lease is terminated by Tenant in bankruptcy or following a Tenant Default, Landlord will, after request provided in accordance with the Lease, enter into a new lease for the Premises with the Leasehold Mortgagee for the remainder of the Lease Term, without warranty of possession or quiet enjoyment by Landlord, and subject to the payment of all amounts due under the Lease.
	(6)    Foreclosure of a Leasehold Mortgage does not require Landlord consent, and upon such foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.
	(7)    A Leasehold Mortgage shall not be deemed to constitute an assignment or Transfer by Tenant.
Attornment	Landlord will permit a Leasehold Mortgage to provide that, upon foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.

H-4-7

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease: Ground Lease Agreement (the “Lease”) between The Charlotte-Mecklenburg Hospital Authority (the “Landlord”) and HR of Carolinas, LLC (the “Tenant”), dated as of December 29, 2008

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	10520 Park Road, Pineville, North Carolina
Expiration Date	December 31, 2083
Renewals	Two ten-year Extension Periods
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	Tenant owns Improvements, subject to reversionary interest of landlord.
Transfer of Leasehold Interest	•    Transfers do not include:
	(1)    Space Leases or subleases not otherwise prohibited;
	(2)    A Change in Ownership of Tenant or its Affiliate;
	(3)    The Transfer of an Interest, in whole or in part, to an Affiliate of Tenant;
	(4)    The conveyance of an ownership interest in Tenant to the Investment Entity pursuant to the Side Letter Agreement;
	(5)    A conveyance of any ownership interest in the Investment Entity to any Person and by any Person; or
	(6)    The granting of a Leasehold Mortgage or any foreclosure or deed-in-lieu resulting therefrom or any conveyance to a purchaser at a foreclosure sale or deed-in-lieu thereof pursuant to a Leasehold Mortgage.
	•     Landlord’s consent is not required for an assignment to (i) an Affiliate of Tenant, (ii) a Qualified Person, or (iii) an Investment Entity.
	•     Landlord has a Right of First Offer on all Available Space for lease.
	•     Landlord has a Right of First Refusal on all Available Space for lease.
	•     Landlord has a Repurchase Right prior to the sale of any Interest by Tenant.
	•     Except as a result of a Change of Ownership of Tenant’s corporate parent, and except to the extent of ownership

H-4-8

Lease Provision	Summary
	interests in Tenant held by Investors or the Investment Entity, for a period of seven (7) years following the Lease Effective Date, neither Tenant nor any Affiliate of Tenant shall, within the boundaries of the county in which the Building is located, either:
	(1)   Own, construct, or develop any improvements located on any land owned or controlled by *; or
	(2)   Hold an equity interest in any property or development in which * also holds an equity interest.
Summary of Rights of Mortgagee	•    Any Leasehold Mortgagee must be either a qualified source meeting criteria acceptable to Landlord, including criteria relating to financial worth, stability, reputation and being a Qualified Person or an Institutional Lender.
	•     Insurance companies, public pension funds and retirement funds with a net worth of $50,000,000 or more are included in the definition of Institutional Lender.
	•     Tenant has the right to finance or refinance any debt secured by a Leasehold Mortgage so long as:
	(1)   the term of such financing does not extend beyond the Lease Expiration Date;
	(2)   the aggregate debt incurred in such financing does not exceed 90% of the appraised fair market value of Tenant’s Leasehold Estate;
	(3)    there is no mortgage balance at the end of the Lease Term; and
	(4)    such Leasehold Mortgage is subject to the terms of the Lease and subordinate to the rights of Landlord.
	•     Subject and subordinate to the Leasehold Mortgage, Tenant’s rights to all rent under the Space Leases are collaterally assigned to Landlord.
	•     Under no circumstances shall Landlord subordinate its interests in the Premises to the lien of any Leasehold Mortgagee.
	•     The Leasehold Mortgage must expressly prohibit the Leasehold Mortgagee from naming Landlord as a party in any foreclosure or other action relating to the Leasehold Mortgage or seeking a judgment against Landlord based upon the Leasehold Mortgage or any related instrument or document.
	•     Landlord will permit a Leasehold Mortgage to include the following terms:
	(1)   Any notice, demand, election or other communication that would adversely affect the Leasehold Mortgage from Landlord to Tenant must be delivered simultaneously to Leasehold Mortgagee.
	(2)   Leasehold Mortgagee has the right to cure any Default by Tenant within 45 days following receipt of Default Notice (or, if the Default cannot be cured within such 45-day period, Leasehold Mortgagee has promptly initiated the cure and diligently and continuously pursues it to completion).

H-4-9

Lease Provision	Summary
	(3)    Landlord cannot exercise its remedies against Tenant so long as Leasehold Mortgagee (i) commences foreclosure of its lien on Tenant’s Leasehold Estate within 70 days after Leasehold Mortgagee’s receipt of the Default Notice, (ii) completes such foreclosure with reasonable diligence, and (iii) pays upon demand all amounts owing under the Lease.
	(4)    Alternatively, following an uncured event of Default by Tenant, Landlord may elect (i) to assume and agree to pay the outstanding balance owing under the loan documents as and when such balance becomes due and payable (together with any applicable penalty, premium, yield maintenance fee, assumption fee or other cost or expense), or (ii) to acquire from Leasehold Mortgagee the Leasehold Mortgage and Promissory Note for the unpaid balance thereof plus non-delinquent accrued interest (without late fees or charges for Default, but including any applicable prepayment penalty, premium or other charge, cost or expense).
	(5)    If the Lease is terminated by Tenant in bankruptcy or following a Tenant Default, Landlord will, after request provided in accordance with the Lease, enter into a new lease for the Premises with the Leasehold Mortgagee for the remainder of the Lease Term, without warranty of possession or quiet enjoyment by Landlord, and subject to the payment of all amounts due under the Lease.
	(6)   Foreclosure of a Leasehold Mortgage does not require Landlord consent, and upon such foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults. (7)   A Leasehold Mortgage shall not be deemed to constitute an assignment or Transfer by Tenant.
Attornment	Landlord will permit a Leasehold Mortgage to provide that, upon foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.

H-4-10

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:  Ground Lease Agreement (the “Lease”) between The Charlotte-Mecklenburg Hospital Authority (the “Landlord”) and HR of Carolinas, LLC (the “Tenant”), dated as of December 29, 2008

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	1010 Edgehill Road, Charlotte, North Carolina
Expiration Date	December 31, 2083
Renewals	Two ten-year Extension Periods
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	Tenant owns Improvements, subject to reversionary interest of Landlord.
Transfer of	•   Transfers do not include:
Leasehold Interest
	(1)   Space Leases or subleases not otherwise prohibited;
	(2)   A Change in Ownership of Tenant or its Affiliate;
	(3)   The Transfer of an Interest, in whole or in part, to an Affiliate of Tenant;
	(4)   The conveyance of an ownership interest in Tenant to the Investment Entity pursuant to the Side Letter Agreement;
	(5)   A conveyance of any ownership interest in the Investment Entity to any Person and by any Person; or
	(6)   The granting of a Leasehold Mortgage or any foreclosure or deed-in-lieu resulting therefrom or any conveyance to a purchaser at a foreclosure sale or deed-in-lieu thereof pursuant to a Leasehold Mortgage.
	•   Landlord’s consent is not required for an assignment to (i) an Affiliate of Tenant, (ii) a Qualified Person, or (iii) an Investment Entity.
	•   Landlord has a Right of First Offer on all Available Space for lease.
	•   Landlord has a Right of First Refusal on all Available Space for lease.
	•   Landlord has a Repurchase Right prior to the sale of any Interest by Tenant.
	•   Except as a result of a Change of Ownership of Tenant’s corporate parent, and except to the extent of ownership

H-4-11

Lease Provision	Summary
	interests in Tenant held by Investors or the Investment Entity, for a period of seven (7) years following the Lease Effective Date, neither Tenant nor any Affiliate of Tenant shall, within the boundaries of the county in which the Building is located, either:
	(1)   Own, construct, or develop any improvements located on any land owned or controlled by *; or
	(2)   Hold an equity interest in any property or development in which * also holds an equity interest.
Summary of Rights of Mortgagee	•   Any Leasehold Mortgagee must be either a qualified source meeting criteria acceptable to Landlord, including criteria relating to financial worth, stability, reputation and being a Qualified Person or an Institutional Lender.
	•   Insurance companies, public pension funds and retirement funds with a net worth of $50,000,000 or more are included in the definition of Institutional Lender.
	•   Tenant has the right to finance or refinance any debt secured by a Leasehold Mortgage so long as:
	(1)   the term of such financing does not extend beyond the Lease Expiration Date;
	(2)   the aggregate debt incurred in such financing does not exceed 90% of the appraised fair market value of Tenant’s Leasehold Estate;
	(3)   there is no mortgage balance at the end of the Lease Term; and
	(4)   such Leasehold Mortgage is subject to the terms of the Lease and subordinate to the rights of Landlord.
	•   Subject and subordinate to the Leasehold Mortgage, Tenant’s rights to all rent under the Space Leases are collaterally assigned to Landlord.
	•   Under no circumstances shall Landlord subordinate its interests in the Premises to the lien of any Leasehold Mortgagee.
	•   The Leasehold Mortgage must expressly prohibit the Leasehold Mortgagee from naming Landlord as a party in any foreclosure or other action relating to the Leasehold Mortgage or seeking a judgment against Landlord based upon the Leasehold Mortgage or any related instrument or document.
	•   Landlord will permit a Leasehold Mortgage to include the following terms:
	(1)   Any notice, demand, election or other communication that would adversely affect the Leasehold Mortgage from Landlord to Tenant must be delivered simultaneously to Leasehold Mortgagee.
	(2)   Leasehold Mortgagee has the right to cure any Default by Tenant within 45 days following receipt of Default Notice (or, if the Default cannot be cured within such 45-day period, Leasehold Mortgagee has promptly initiated the cure and diligently and continuously pursues it to completion).

H-4-12

Lease Provision	Summary
	(3)   Landlord cannot exercise its remedies against Tenant so long as Leasehold Mortgagee (i) commences foreclosure of its lien on Tenant’s Leasehold Estate within 70 days after Leasehold Mortgagee’s receipt of the Default Notice, (ii) completes such foreclosure with reasonable diligence, and (iii) pays upon demand all amounts owing under the Lease.
	(4)   Alternatively, following an uncured event of Default by Tenant, Landlord may elect (i) to assume and agree to pay the outstanding balance owing under the loan documents as and when such balance becomes due and payable (together with any applicable penalty, premium, yield maintenance fee, assumption fee or other cost or expense), or (ii) to acquire from Leasehold Mortgagee the Leasehold Mortgage and Promissory Note for the unpaid balance thereof plus non-delinquent accrued interest (without late fees or charges for Default, but including any applicable prepayment penalty, premium or other charge, cost or expense).
	(5)   If the Lease is terminated by Tenant in bankruptcy or following a Tenant Default, Landlord will, after request provided in accordance with the Lease, enter into a new lease for the Premises with the Leasehold Mortgagee for the remainder of the Lease Term, without warranty of possession or quiet enjoyment by Landlord, and subject to the payment of all amounts due under the Lease.
	(6)   Foreclosure of a Leasehold Mortgage does not require Landlord consent, and upon such foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.
	(7)   A Leasehold Mortgage shall not be deemed to constitute an assignment or Transfer by Tenant.
Attornment	Landlord will permit a Leasehold Mortgage to provide that, upon foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.

H-4-13

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:  Ground Lease Agreement (the “Lease”) between Mercy Health Services, Inc. (the “Landlord”) and HR of Carolinas, LLC (the “Tenant”), dated as of December 29, 2008

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	Building 400 — 10620 Park Road, Pineville, North Carolina
Expiration Date	December 31, 2083
Renewals	Two ten-year Extension Periods
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	•   Tenant owns Improvements, subject to reversionary interest of Landlord.
	•   Air rights above the Improvements are reserved by Landlord.
Transfer of Leasehold	•   Transfers do not include:
Interest
	(1)   Space Leases or subleases not otherwise prohibited;
	(2)   A Change in Ownership of Tenant or its Affiliate;
	(3)   The Transfer of an Interest, in whole or in part, to an Affiliate of Tenant;
	(4)   The conveyance of an ownership interest in Tenant to the Investment Entity pursuant to the Side Letter Agreement;
	(5)   A conveyance of any ownership interest in the Investment Entity to any Person and by any Person; or
	(6)   The granting of a Leasehold Mortgage or any foreclosure or deed-in-lieu resulting therefrom or any conveyance to a purchaser at a foreclosure sale or deed-in-lieu thereof pursuant to a Leasehold Mortgage.
	•   Landlord’s consent is not required for an assignment to (i) an Affiliate of Tenant, (ii) a Qualified Person, or (iii) an Investment Entity.
	•   Landlord has a Right of First Offer on all Available Space for lease.
	•   Landlord has a Right of First Refusal on all Available Space for lease.
	•   Landlord has a Repurchase Right prior to the sale of any Interest by Tenant.
	•   Except as a result of a Change of Ownership of Tenant’s corporate parent, and except to the extent of ownership

H-4-14

Lease Provision	Summary
	interests in Tenant held by Investors or the Investment Entity, for a period of seven (7) years following the Lease Effective Date, neither Tenant nor any Affiliate of Tenant shall, within the boundaries of the county in which the Building is located, either:
	(1)   Own, construct, or develop any improvements located on any land owned or controlled by *; or
	(2)   Hold an equity interest in any property or development in which * also holds an equity interest.
Summary of Rights of Mortgagee	•   Any Leasehold Mortgagee must be either a qualified source meeting criteria acceptable to Landlord, including criteria relating to financial worth, stability, reputation and being a Qualified Person or an Institutional Lender.
	•   Insurance companies, public pension funds and retirement funds with a net worth of $50,000,000 or more are included in the definition of Institutional Lender.
	•   Tenant has the right to finance or refinance any debt secured by a Leasehold Mortgage so long as:
	(1)   the term of such financing does not extend beyond the Lease Expiration Date;
	(2)   the aggregate debt incurred in such financing does not exceed 90% of the appraised fair market value of Tenant’s Leasehold Estate;
	(3)   there is no mortgage balance at the end of the Lease Term; and
	(4)   such Leasehold Mortgage is subject to the terms of the Lease and subordinate to the rights of Landlord.
	•   Subject and subordinate to the Leasehold Mortgage, Tenant’s rights to all rent under the Space Leases are collaterally assigned to Landlord.
	•   Under no circumstances shall Landlord subordinate its interests in the Premises to the lien of any Leasehold Mortgagee.
	•   The Leasehold Mortgage must expressly prohibit the Leasehold Mortgagee from naming Landlord as a party in any foreclosure or other action relating to the Leasehold Mortgage or seeking a judgment against Landlord based upon the Leasehold Mortgage or any related instrument or document.
	•   Landlord will permit a Leasehold Mortgage to include the following terms:
	(1)  Any notice, demand, election or other communication that would adversely affect the Leasehold Mortgage from Landlord to Tenant must be delivered simultaneously to Leasehold Mortgagee.
	(2)   Leasehold Mortgagee has the right to cure any Default by Tenant within 45 days following receipt of Default Notice (or, if the Default cannot be cured within such 45-day period, Leasehold Mortgagee has promptly initiated the cure and diligently and continuously pursues it to completion).

H-4-15

Lease Provision	Summary
	(3)   Landlord cannot exercise its remedies against Tenant so long as Leasehold Mortgagee (i) commences foreclosure of its lien on Tenant’s Leasehold Estate within 70 days after Leasehold Mortgagee’s receipt of the Default Notice, (ii) completes such foreclosure with reasonable diligence, and (iii) pays upon demand all amounts owing under the Lease.
	(4)   Alternatively, following an uncured event of Default by Tenant, Landlord may elect (i) to assume and agree to pay the outstanding balance owing under the loan documents as and when such balance becomes due and payable (together with any applicable penalty, premium, yield maintenance fee, assumption fee or other cost or expense), or (ii) to acquire from Leasehold Mortgagee the Leasehold Mortgage and Promissory Note fox the unpaid balance thereof plus non-delinquent accrued interest (without late fees or charges for Default, but including any applicable prepayment penalty, premium or other charge, cost or expense).
	(5)   If the Lease is terminated by Tenant in bankruptcy or following a Tenant Default, Landlord will, after request provided in accordance with the Lease, enter into a new lease for the Premises with the Leasehold Mortgagee for the remainder of the Lease Term, without warranty of possession or quiet enjoyment by Landlord, and subject to the payment of all amounts due under the Lease.
	(6)   Foreclosure of a Leasehold Mortgage does not require Landlord consent, and upon such foreclosure. Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.
	(7)   A Leasehold Mortgage shall not be deemed to constitute an assignment or Transfer by Tenant.
Attornment	Landlord will permit a Leasehold Mortgage to provide that, upon foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.

H-4-16

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:  Ground Lease Agreement (the “Lease”) between The Charlotte-Mecklenburg Hospital Authority (the “Landlord”) and HR of Carolinas, LLC (the “Tenant”) , dated as of December 29, 2008

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	10516 Park Road, Pineville, North Carolina
Expiration Date	December 31, 2083
Renewals	Two ten-year Extension Periods
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	Tenant owns Improvements, subject to reversionary interest of Landlord.
Transfer of Leasehold Interest	•   Transfers do not include:
	(1)   Space Leases or subleases not otherwise prohibited;
	(2)   A Change in Ownership of Tenant or its Affiliate;
	(3)   The Transfer of an Interest, in whole or in part, to an Affiliate of Tenant;
	(4)   The conveyance of an ownership interest in Tenant to the Investment Entity pursuant to the Side Letter Agreement;
	(5)   A conveyance of any ownership interest in the Investment Entity to any Person and by any Person; or
	(6)   The granting of a Leasehold Mortgage or any foreclosure or deed-in-lieu resulting therefrom or any conveyance to a purchaser at a foreclosure sale or deed-in-lieu thereof pursuant to a Leasehold Mortgage.
	•   Landlord’s consent is not required for an assignment to (i) an Affiliate of Tenant, (ii) a Qualified Person, or (iii) an Investment Entity.
	•   Landlord has a Right of First Offer on all Available Space for lease.
	•   Landlord has a Right of First Refusal on all Available Space for lease.
	•   Landlord has a Repurchase Right prior to the sale of any Interest by Tenant.
	•   Except as a result of a Change of Ownership of Tenant’s corporate parent, and except to the extent of ownership

H-4-17

Lease Provision	Summary
	interests in Tenant held by Investors or the Investment Entity, for a period of seven (7) years following the Lease Effective Date, neither Tenant nor any Affiliate of Tenant shall, within the boundaries of the county in which the Building is located, either:
	(1)   Own, construct, or develop any improvements located on any land owned or controlled by *; or
	(2)   Hold an equity interest in any property or development in which * also holds an equity interest.
Summary of Rights of Mortgagee	•   Any Leasehold Mortgagee must be either a qualified source meeting criteria acceptable to Landlord, including criteria relating to financial worth, stability, reputation and being a Qualified Person or an Institutional Lender.
	•   Insurance companies, public pension funds and retirement funds with a net worth of $50,000,000 or more are included in the definition of Institutional Lender.
	•   Tenant has the right to finance or refinance any debt secured by a Leasehold Mortgage so long as:
	(l)   the term of such financing does not extend beyond the Lease Expiration Date;
	(2)   the aggregate debt incurred in such financing does not exceed 90% of the appraised fair market value of Tenant’s Leasehold Estate;
	(3)   there is no mortgage balance at the end of the Lease Term; and
	(4)   such Leasehold Mortgage is subject to the terms of the Lease and subordinate to the rights of Landlord.
	•   Subject and subordinate to the Leasehold Mortgage, Tenant’s rights to all rent under the Space Leases are collaterally assigned to Landlord.
	•   Under no circumstances shall Landlord subordinate its interests in the Premises to the lien of any Leasehold Mortgagee.
	•   The Leasehold Mortgage must expressly prohibit the Leasehold Mortgagee from naming Landlord as a party in any foreclosure or other action relating to the Leasehold Mortgage or seeking a judgment against Landlord based upon the Leasehold Mortgage or any related instrument or document.
	•   Landlord will permit a Leasehold Mortgage to include the following terms:
	(1)   Any notice, demand, election or other communication that would adversely affect the Leasehold Mortgage from Landlord to Tenant must be delivered simultaneously to Leasehold Mortgagee.
	(2)   Leasehold Mortgagee has the right to cure any Default by Tenant within 45 days following receipt of Default Notice (or, if the Default cannot be cured within such 45-day period, Leasehold Mortgagee has promptly initiated the cure and diligently and continuously pursues it to completion).

H-4-18

Lease Provision	Summary
	(3)   Landlord cannot exercise its remedies against Tenant so long as Leasehold Mortgagee (i) commences foreclosure of its lien on Tenant’s Leasehold Estate within 70 days after Leasehold Mortgagee’s receipt of the Default Notice, (ii) completes such foreclosure with reasonable diligence, and (iii) pays upon demand all amounts owing under the Lease.
	(4)   Alternatively, following an uncured event of Default by Tenant, Landlord may elect (i) to assume and agree to pay the outstanding balance owing under the loan documents as and when such balance becomes due and payable (together with any applicable penalty, premium, yield maintenance fee, assumption fee or other cost or expense), or (ii) to acquire from Leasehold Mortgagee the Leasehold Mortgage and Promissory Note for the unpaid balance thereof plus non-delinquent accrued interest (without late fees or charges for Default, but including any applicable prepayment penalty, premium or other charge, cost or expense).
	(5)   If the Lease is terminated by Tenant in bankruptcy or following a Tenant Default, Landlord will, after request provided in accordance with the Lease, enter into a new lease for the Premises with the Leasehold Mortgagee for the remainder of the Lease Term, without warranty of possession or quiet enjoyment by Landlord, and subject to the payment of all amounts due under the Lease.
	(6)   Foreclosure of a Leasehold Mortgage does not require Landlord consent, and upon such foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.
	(7)   A Leasehold Mortgage shall not be deemed to constitute an assignment or Transfer by Tenant.
Attornment	Landlord will permit a Leasehold Mortgage to provide that, upon foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.

H-4-19

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:   Ground Lease Agreement (the “Lease”) between The Charlotte-Mecklenburg Hospital Authority (the “Landlord”) and HR of Carolinas, LLC (the “Tenant”), dated as of December 29, 2008

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	University Medical Park — 101 East W.T. Harris Boulevard, Charlotte, North Carolina
Expiration Date	December 31, 2083
Renewals	Two ten-year Extension Periods
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	•   Tenant owns Improvements, subject to reversionary interest of Landlord.
	•   Air rights above the Improvements are reserved by Landlord.
Transfer of Leasehold Interest	•   Transfers do not include:
	(1)   Space Leases or subleases not otherwise prohibited;
	(2)   A Change in Ownership of Tenant or its Affiliate;
	(3)   The Transfer of an Interest, in whole or in part, to an Affiliate of Tenant;
	(4)   The conveyance of an ownership interest in Tenant to the Investment Entity pursuant to the Side Letter Agreement;
	(5)   A conveyance of any ownership interest in the Investment. Entity to any Person and by any Person; or
	(6)   The granting of a Leasehold Mortgage or any foreclosure or deed-in-lieu resulting therefrom or any conveyance to a purchaser at a foreclosure sale or deed-in-lieu thereof pursuant to a Leasehold Mortgage.
	•   Landlord’s consent is not required for an assignment to (i) an Affiliate of Tenant, (ii) a Qualified Person, or (iii) an Investment Entity.
	•   Landlord has a Right of First Offer on all Available Space for lease.
	•   Landlord has a Right of First Refusal on all Available Space for lease.
	•   Landlord has a Repurchase Right prior to the sale of any Interest by Tenant.
	•   Except as a result of a Change of Ownership of Tenant’s

H-4-20

Lease Provision	Summary
	corporate parent, and except to the extent of ownership interests in Tenant held by Investors or the Investment Entity, for a period of seven (7) years following the Lease Effective Date, neither Tenant nor any Affiliate of Tenant shall, within the boundaries of the county in which the Building is located, either:
	(1)   Own, construct, or develop any improvements located on any land owned or controlled by *; or
	(2)   Hold an equity interest in any property or development in which * also holds an equity interest.
Summary of Rights of Mortgagee	•   Any Leasehold Mortgagee must be either a qualified source meeting criteria acceptable to Landlord, including criteria relating to financial worth, stability, reputation and being a Qualified Person or an Institutional Lender.
	•   Insurance companies, public pension funds and retirement funds with a net worth of $50,000,000 or more are included in the definition of Institutional Lender.
	•   Tenant has the right to finance or refinance any debt secured by a Leasehold Mortgage so long as:
	(1)   the term of such financing does not extend beyond the Lease Expiration Date;
	(2)   the aggregate debt incurred in such financing does not exceed 90% of the appraised fair market value of Tenant’s Leasehold Estate;
	(3)   there is no mortgage balance at the end of the Lease Term; and
	(4)   such Leasehold Mortgage is subject to the terms of the Lease and subordinate to the rights of Landlord.
	•   Subject and subordinate to the Leasehold Mortgage, Tenant’s rights to all rent under the Space Leases are collaterally assigned to Landlord.
	•   Under no circumstances shall Landlord subordinate its interests in the Premises to the lien of any Leasehold Mortgagee.
	•   The Leasehold Mortgage must expressly prohibit the Leasehold Mortgagee from naming Landlord as a party in any foreclosure or other action relating to the Leasehold Mortgage or seeking a judgment against Landlord based upon the Leasehold Mortgage or any related instrument or document.
	•   Landlord will permit a Leasehold Mortgage to include the following terms:
	(l)   Any notice, demand, election or other communication that would adversely affect the Leasehold Mortgage from Landlord to Tenant must be delivered simultaneously to Leasehold Mortgagee.
	(2)   Leasehold Mortgagee has the right to cure any Default by Tenant within 45 days following receipt of Default Notice (or, if the Default cannot be cured within such 45-day period, Leasehold Mortgagee has promptly initiated the cure and diligently and continuously pursues it to

H-4-21

Lease Provision	Summary
	completion).
	(3)   Landlord cannot exercise its remedies against Tenant so long as Leasehold Mortgagee (i) commences foreclosure of its lien on Tenant’s Leasehold Estate within 70 days after Leasehold Mortgagee’s receipt of the Default Notice, (ii) completes such foreclosure with reasonable diligence, and (iii) pays upon demand all amounts owing under the Lease.
	(4)   Alternatively, following an uncured event of Default by Tenant, Landlord may elect (i) to assume and agree to pay the outstanding balance owing under the loan documents as and when such balance becomes due and payable (together with any applicable penalty, premium, yield maintenance fee, assumption fee or other cost or expense), or (ii) to acquire from Leasehold Mortgagee the Leasehold Mortgage and Promissory Note for the unpaid balance thereof plus non-delinquent accrued interest (without late fees or charges for Default, but including any applicable prepayment penalty, premium or other charge, cost or expense).
	(5)   If the Lease is terminated by Tenant in bankruptcy or following a Tenant Default, Landlord will, after request provided in accordance with the Lease, enter into a new lease for the Premises with the Leasehold Mortgagee for the remainder of the Lease Term, without warranty of possession or quiet enjoyment by Landlord, and subject to the payment of all amounts due under the Lease.
	(6)   Foreclosure of a Leasehold Mortgage does not require Landlord consent, and upon such foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.
	(7)   A Leasehold Mortgage shall not be deemed to constitute an assignment or Transfer by Tenant.
Attornment	Landlord will permit a Leasehold Mortgage to provide that, upon foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.

H-4-22

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:   Ground Lease Agreement (the “Lease”) between The Charlotte-Mecklenburg Hospital Authority (the “Landlord”) and HR of Carolinas, LLC (the “Tenant”), dated as of December 29, 2008

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	1023 Edgehill Road South, Charlotte, North Carolina
Expiration Date	December 31, 2083
Renewals	Two ten-year Extension Periods
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	Tenant owns Improvements, subject to reversionary interest of Landlord.
Transfer of Leasehold Interest	•   Transfers do not include:
	(1)   Space Leases or subleases not otherwise prohibited;
	(2)   A Change in Ownership of Tenant or its Affiliate;
	(3)   The Transfer of an Interest, in whole or in part, to an Affiliate of Tenant;
	(4)   The conveyance of an ownership interest in Tenant to the Investment Entity pursuant to the Side Letter Agreement;
	(5)   A conveyance of any ownership interest in the Investment Entity to any Person and by any Person; or
	(6)   The granting of a Leasehold Mortgage or any foreclosure or deed-in-lieu resulting therefrom or any conveyance to a purchaser at a foreclosure sale or deed-in-lieu thereof pursuant to a Leasehold Mortgage.
	•   Landlord’s consent is not required for an assignment to (i) an Affiliate of Tenant, (ii) a Qualified Person, or (iii) an Investment Entity.
	•   Landlord has a Right of First Offer on all Available Space for lease.
	•   Landlord has a Right of First Refusal on all Available Space for lease.
	•   Landlord has a Repurchase Right prior to the sale of any Interest by Tenant.
	•   Except as a result of a Change of Ownership of Tenant’s corporate parent, and except to the extent of ownership

H-4-23

Lease Provision	Summary
	interests in Tenant held by Investors or the Investment Entity, for a period of seven (7) years following the Lease Effective Date, neither Tenant nor any Affiliate of Tenant shall, within the boundaries of the county in which the Building is located, either:
	(1)   Own, construct, or develop any improvements located on any land owned or controlled by *; or
	(2)   Hold an equity interest in any property or development in which * also holds an equity interest.
Summary of Rights of Mortgagee	•   Any Leasehold Mortgagee must be either a qualified source meeting criteria acceptable to Landlord, including criteria relating to financial worth, stability, reputation and being a Qualified Person or an Institutional Lender.
	•   Insurance companies, public pension funds and retirement funds with a net worth of $50,000,000 or more are included in the definition of Institutional Lender.
	•   Tenant has the right to finance or refinance any debt secured by a Leasehold Mortgage so long as:
	(1)   the term of such financing does not extend beyond the Lease Expiration Date;
	(2)   the aggregate debt incurred in such financing does not exceed 90% of the appraised fair market value of Tenant’s Leasehold Estate;
	(3)   there is no mortgage balance at the end of the Lease Term; and
	(4)   such Leasehold Mortgage is subject to the terms of the Lease and subordinate to the rights of Landlord.
	•   Subject and subordinate to the Leasehold Mortgage, Tenant’s rights to all rent under the Space Leases are collaterally assigned to Landlord.
	•   Under no circumstances shall Landlord subordinate its interests in the Premises to the lien of any Leasehold Mortgagee.
	•   The Leasehold Mortgage must expressly prohibit the Leasehold Mortgagee from naming Landlord as a party in any foreclosure or other action relating to the Leasehold Mortgage or seeking a judgment against Landlord based upon the Leasehold Mortgage or any related instrument or document.
	•   Landlord will permit a Leasehold Mortgage to include the following terms:
	(1)   Any notice, demand, election or other communication that would adversely affect the Leasehold Mortgage from Landlord to Tenant must be delivered simultaneously to Leasehold Mortgagee.
	(2)   Leasehold Mortgagee has the right to cure any Default by Tenant within 45 days following receipt of Default Notice (or, if the Default cannot be cured within such 45-day period, Leasehold Mortgagee has promptly initiated the cure and diligently and continuously pursues it to completion).

H-4-24

Lease Provision	Summary
	(3)   Landlord cannot exercise its remedies against Tenant so long as Leasehold Mortgagee (i) commences foreclosure of its lien on Tenant’s Leasehold Estate within 70 days after Leasehold Mortgagee’s receipt of the Default Notice, (ii) completes such foreclosure with reasonable diligence, and (iii) pays upon demand all amounts owing under the Lease.
	(4)   Alternatively, following an uncured event of Default by Tenant, Landlord may elect (i) to assume and agree to pay the outstanding balance owing under the loan documents as and when such balance becomes due and payable (together with any applicable penalty, premium, yield maintenance fee, assumption fee or other cost or expense), or (ii) to acquire from Leasehold Mortgagee the Leasehold Mortgage and Promissory Note for the unpaid balance thereof plus non-delinquent accrued interest (without late fees or charges for Default, but including any applicable prepayment penalty, premium or other charge, cost or expense).
	(5)   If the Lease is terminated by Tenant in bankruptcy or following a Tenant Default, Landlord will, after request provided in accordance with the Lease, enter into a new lease for the Premises with the Leasehold Mortgagee for the remainder of the Lease Term, without warranty of possession or quiet enjoyment by Landlord, and subject to the payment of all amounts due under the Lease.
	(6)   Foreclosure of a Leasehold Mortgage does not require Landlord consent, and upon such foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.
	(7)   A Leasehold Mortgage shall not be deemed to constitute an assignment or Transfer by Tenant.
Attornment	Landlord will permit a Leasehold Mortgage to provide that, upon foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.

H-4-25

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:   Ground Lease Agreement (the “Lease”) between The Charlotte-Mecklenburg Hospital Authority (the “Landlord”) and HR of Carolines, LLC (the “Tenant”), dated as of December 29, 2008

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	1350 South Kings Drive, Charlotte, North Carolina
Expiration Date	December 31, 2083
Renewals	Two ten-year Extension Periods
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	Tenant owns Improvements, subject to reversionary interest of Landlord.
Transfer of.	•   Transfers do not include:
Leasehold Interest
	(1)   Space Leases or subleases not otherwise prohibited;
	(2)   A Change in Ownership of Tenant or its Affiliate;
	(3)   The Transfer of an Interest, in whole or in part, to an Affiliate of Tenant;
	(4)   The conveyance of an ownership interest in Tenant to the Investment Entity pursuant to the Side Letter Agreement;
	(5)   A conveyance of any ownership interest in the Investment Entity to any Person and by any Person; or
	(6)   The granting of a Leasehold Mortgage or any foreclosure or deed-in-lieu resulting therefrom or any conveyance to a purchaser at a foreclosure sale or deed-in-lieu thereof pursuant to a Leasehold Mortgage.
	•   Landlord’s consent is not required for an assignment to (i) an Affiliate of Tenant, (ii) a Qualified Person, or (iii) an Investment Entity.
	•   Landlord has a Right of First Offer on all Available Space for lease.
	•   Landlord has a Right of First Refusal on all Available Space for lease.
	•   Landlord has a Repurchase Right prior to the sale of any Interest by Tenant.
	•   Except as a result of a Change of Ownership of Tenant’s corporate parent, and except to the extent of ownership

H-4-26

Lease Provision	Summary
	interests in Tenant held by Investors or the Investment Entity, for a period of seven (7) years following the Lease Effective Date, neither Tenant nor any Affiliate of Tenant shall, within the boundaries of the county in which the Building is located, either:
	(1)   Own, construct, or develop any improvements located on any land owned or controlled by *; or
	(2)   Hold an equity interest in any property or development in which * also holds an equity interest.
Summary of Rights of Mortgagee	•   Any Leasehold Mortgagee must be either a qualified source meeting criteria acceptable to Landlord, including criteria relating to financial worth, stability, reputation and being a Qualified Person or an Institutional Lender.
	•   Insurance companies, public pension funds and retirement funds with a net worth of $50,000,000 or more are included in the definition of Institutional Lender.
	•   Tenant has the right to finance or refinance any debt secured by a Leasehold Mortgage so long as:
	(1)   the term of such financing does not extend beyond the Lease Expiration Date;
	(2)   the aggregate debt incurred in such financing does not exceed 90% of the appraised fair market value of Tenant’s Leasehold Estate;
	(3)   there is no mortgage balance at the end of the Lease Term; and
	(4)   such Leasehold Mortgage is subject to the terms of the Lease and subordinate to the rights of Landlord.
	•   Subject and subordinate to the Leasehold Mortgage, Tenant’s rights to all rent under the Space Leases are collaterally assigned to Landlord.
	•   Under no circumstances shall Landlord subordinate its interests in the Premises to the lien of any Leasehold Mortgagee.
	•   The Leasehold Mortgage must expressly prohibit the Leasehold Mortgagee from naming Landlord as a party in any foreclosure or other action relating to the Leasehold Mortgage or seeking a judgment against Landlord based upon the Leasehold Mortgage or any related instrument or document.
	•   Landlord will permit a Leasehold Mortgage to include the following terms:
	(1)   Any notice, demand, election or other communication that would adversely affect the Leasehold Mortgage from Landlord to Tenant must be delivered simultaneously to Leasehold Mortgagee.
	(2)   Leasehold Mortgagee has the right to cure any Default by Tenant within 45 days following receipt of Default Notice (or, if the Default cannot be cured within such 45–day period, Leasehold Mortgagee has promptly initiated the cure and diligently and continuously pursues it to completion).

H-4-27

Lease Provision	Summary
	(3)   Landlord cannot exercise its remedies against Tenant so long as Leasehold Mortgagee (i) commences foreclosure of its lien on Tenant’s Leasehold Estate within 70 days after Leasehold Mortgagee’s receipt of the Default Notice, (ii) completes such foreclosure with reasonable diligence, and (iii) pays upon demand all amounts owing under the Lease.
	(4)   Alternatively, following an uncured event of Default by Tenant, Landlord may elect (i) to assume and agree to pay the outstanding balance owing under the loan documents as and when such balance becomes due and payable (together with any applicable penalty, premium, yield maintenance fee, assumption fee or other cost or expense), or (ii) to acquire from Leasehold Mortgagee the Leasehold Mortgage and Promissory Note for the unpaid balance thereof plus non-delinquent accrued interest (without late fees or charges for Default, but including any applicable prepayment penalty, premium or other charge, cost or expense).
	(5)   If the Lease is terminated by Tenant in bankruptcy or following a Tenant Default, Landlord will, after request provided in accordance with the Lease, enter into a new lease for the Premises with the Leasehold Mortgagee for the remainder of the Lease Term, without warranty of possession or quiet enjoyment by Landlord, and subject to the payment of all amounts due under the Lease.
	(6)   Foreclosure of a Leasehold Mortgage does not require Landlord consent, and upon such foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.
	(7)   A Leasehold Mortgage shall not be deemed to constitute an assignment or Transfer by Tenant.
Attornment	Landlord will permit a Leasehold Mortgage to provide that, upon foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.

H-4-28

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:   Ground Lease Agreement (the “Lease”) between The Carolinas Healthcare Foundation, Inc. and The Charlotte-Mecklenburg Hospital Authority (collectively, the “Landlord”) and HR of Carolinas, LLC (the “Tenant”), dated as of December 29, 2008

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	Morrocroft I — 4501 Cameron Valley Parkway, Charlotte, North Carolina
Expiration Date	December 31, 2083
Renewals	Two ten-year Extension Periods
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	•    Tenant owns Improvements, subject to reversionary interest of Landlord.
	•    Air rights above the Improvements are reserved by Landlord.
Transfer of Leasehold Interest	•    Transfers do not include:
	(1)   Space Leases or subleases not otherwise prohibited;
	(2)   A Change in Ownership of Tenant or its Affiliate;
	(3)   The Transfer of an Interest, in whole or in part, to an Affiliate of Tenant;
	(4)   The conveyance of an ownership interest in Tenant to the Investment Entity pursuant to the Side Letter Agreement;
	(5)   A conveyance of any ownership interest in the Investment Entity to any Person and by any Person; or
	(6)   The granting of a Leasehold Mortgage or any foreclosure or deed-in-lieu resulting therefrom or any conveyance to a purchaser at a foreclosure sale or deed-in-lieu thereof pursuant to a Leasehold Mortgage.
	•   Landlord’s consent is not required for an assignment to (i) an Affiliate of Tenant, (ii) a Qualified Person, or (iii) an Investment Entity.
	•   Landlord has a Right of First Offer on all Available Space for lease.
	•   Landlord has a Right of First Refusal on all Available Space for lease.
	•   Landlord has a Repurchase Right prior to the sale of any Interest by Tenant.

H-4-29

Lease Provision	Summary
	•   Except as a result of a Change of Ownership of Tenant’s corporate parent, and except to the extent of ownership interests in Tenant held by Investors or the Investment Entity, for a period of seven (7) years following the Lease Effective Date, neither Tenant nor any Affiliate of Tenant shall, within the boundaries of the county in which the Building is located, either:
	(l)   Own, construct, or develop any improvements located on any land owned or controlled by *; or
	(2)   Hold an equity interest in any property or development in which * also holds an equity interest.
Summary of Rights of Mortgagee	•   Any Leasehold Mortgagee must be either a qualified source meeting criteria acceptable to Landlord, including criteria relating to financial worth, stability, reputation and being a Qualified Person or an Institutional Lender.
	•   Insurance companies, public pension funds and retirement funds with a net worth of $50,000,000 or more are included in the definition of Institutional Lender.
	•   Tenant has the right to finance or refinance any debt secured by a Leasehold Mortgage so long as:
	(1)   the term of such financing does not extend beyond the Lease Expiration Date;
	(2)   the aggregate debt incurred in such financing does not exceed 90% of the appraised fair market value of Tenant’s Leasehold Estate;
	(3)   there is no mortgage balance at the end of the Lease Term; and
	(4)   such Leasehold Mortgage is subject to the terms of the Lease and subordinate to the rights of Landlord.
	•   Subject and subordinate to the Leasehold Mortgage, Tenant’s rights to all rent under the Space Leases are collaterally assigned to Landlord.
	•   Under no circumstances shall Landlord subordinate its interests in the Premises to the lien of any Leasehold Mortgagee; provided, however, the terms and provisions of the Subordination Agreement shall be given full force and effect.
	•   The Leasehold Mortgage must expressly prohibit the Leasehold Mortgagee from naming Landlord as a party in any foreclosure or other action relating to the Leasehold Mortgage or seeking a judgment against Landlord based upon the Leasehold Mortgage or any related instrument or document.
	•   Landlord will permit a Leasehold Mortgage to include the following terms:
	(l)   Any notice, demand, election or other communication that would adversely affect the Leasehold Mortgage from Landlord to Tenant must be delivered simultaneously to Leasehold Mortgagee.
	(2)   Leasehold Mortgagee has the right to cure any Default by Tenant within 45 days following receipt of Default Notice (or, if the Default cannot be cured within such 45-day

H-4-30

Lease Provision	Summary
	period, Leasehold Mortgagee has promptly initiated the cure and diligently and continuously pursues it to completion).
	(3)   Landlord cannot exercise its remedies against Tenant so long as Leasehold Mortgagee (i) commences foreclosure of its lien on Tenant’s Leasehold Estate within 70 days after Leasehold Mortgagee’s receipt of the Default Notice, (ii) completes such foreclosure with reasonable diligence, and (iii) pays upon demand all amounts owing under the Lease.
	(4)   Alternatively, following an uncured event of Default by Tenant, Landlord may elect (i) to assume and agree to pay the outstanding balance owing under the loan documents as and when such balance becomes due and payable (together with any applicable penalty, premium, yield maintenance fee, assumption fee or other cost or expense), or (ii) to acquire from Leasehold Mortgagee the Leasehold Mortgage and Promissory Note for the unpaid balance thereof plus non-delinquent accrued interest (without late fees or charges for Default, but including any applicable prepayment penalty, premium or other charge, cost or expense).
	(5)   If the Lease is terminated by Tenant in bankruptcy or following a Tenant Default, Landlord will, after request provided in accordance with the Lease, enter into a new lease for the Premises with the Leasehold Mortgagee for the remainder of the Lease Term, without warranty of possession or quiet enjoyment by Landlord, and subject to the payment of all amounts due under the Lease.
	(6)   Foreclosure of a Leasehold Mortgage does not require Landlord consent, and upon such foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.
	(7)   A Leasehold Mortgage shall not be deemed to constitute an assignment or Transfer by Tenant.
Attornment	Landlord will permit a Leasehold Mortgage to provide that, upon foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.

H-4-31

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease: Ground Lease Agreement (the “Lease”) between The Carolinas Healthcare Foundation, Inc. and The Charlotte-Mecklenburg Hospital Authority (collectively, the “Landlord”) and HR of Carolinas, LLC (the “Tenant”), dated as of December 29, 2008

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	Morrocroft II — 4525 Cameron Valley Parkway, Charlotte, North Carolina
Expiration Date	December 31, 2083
Renewals	Two ten-year Extension Periods
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	•   Tenant owns Improvements, subject to reversionary interest of Landlord.
	•   Air rights above the Improvements are reserved by Landlord.
Transfer of Leasehold Interest	•   Transfers do not include:
	(1)   Space Leases or subleases not otherwise prohibited;
	(2)   A Change in Ownership of Tenant or its Affiliate;
	(3)   The Transfer of an Interest, in whole or in part, to an Affiliate of Tenant;
	(4)   The conveyance of an ownership interest in Tenant to the Investment Entity pursuant to the Side Letter Agreement;
	(5)   A conveyance of any ownership interest in the Investment Entity to any Person and by any Person; or
	(6)   The granting of a Leasehold Mortgage or any foreclosure or deed-in-lieu resulting therefrom or any conveyance to a purchaser at a foreclosure sale or deed-in-lieu thereof pursuant to a Leasehold Mortgage.
	•   Landlord’s consent is not required for an assignment to (i) an Affiliate of Tenant, (ii) a Qualified Person, or (iii) an Investment Entity.
	•   Landlord has a Right of First Offer on all Available Space for lease.
	•   Landlord has a Right of First Refusal on all Available Space for lease.
	•   Landlord has a Repurchase Right prior to the sale of any Interest by Tenant.

H-4-32

Lease Provision	Summary
	•   Except as a result of a Change of Ownership of Tenant’s corporate parent, and except to the extent of ownership interests in Tenant held by Investors or the Investment Entity, for a period of seven {7) years following the Lease Effective Date, neither Tenant nor any Affiliate of Tenant shall, within the boundaries of the county in which the Building is located, either:
	(1)   Own, construct, or develop any improvements located on any land owned or controlled by *; or
	(2)   Hold an equity interest in any property or development in which * also holds an equity interest.
Summary of Rights of Mortgagee	•   Any Leasehold Mortgagee must be either a qualified source meeting criteria acceptable to Landlord, including criteria relating to financial worth, stability, reputation and being a Qualified Person or an Institutional Lender.
	•   Insurance companies, public pension funds and retirement funds with a net worth of $50,000,000 or more are included in the definition of Institutional Lender.
	•   Tenant has the right to finance or refinance any debt secured by a Leasehold Mortgage so long as:
	(1)   the term of such financing does not extend beyond the Lease Expiration Date;
	(2)   the aggregate debt incurred in such financing does not exceed 90% of the appraised fair market value of Tenant’s Leasehold Estate;
	(3)   there is no mortgage balance at the end of the Lease Term; and
	(4)   such Leasehold Mortgage is subject to the terms of the Lease and subordinate to the rights of Landlord.
	•   Subject and subordinate to the Leasehold Mortgage, Tenant’s rights to all rent under the Space Leases are collaterally assigned to Landlord.
	•   Under no circumstances shall Landlord subordinate its interests in the Premises to the lien of any Leasehold Mortgagee; provided, however, the terms and provisions of the Subordination Agreement shall be given full force and effect.
	•   The Leasehold Mortgage must expressly prohibit the Leasehold Mortgagee from naming Landlord as a party in any foreclosure or other action relating to the Leasehold Mortgage or seeking a judgment against Landlord based upon the Leasehold Mortgage or any related instrument or document.
	•   Landlord will permit a Leasehold Mortgage to include the following terms:
	(1)   Any notice, demand, election or other communication that would adversely affect the Leasehold Mortgage from Landlord to Tenant must be delivered simultaneously to Leasehold Mortgagee.
	(2)   Leasehold Mortgagee has the right to cure any Default by Tenant within 45 days following receipt of Default Notice (or, if the Default cannot be cured within such 45-day

H-4-33

Lease Provision	Summary
	period, Leasehold Mortgagee has promptly initiated the cure and diligently and continuously pursues it to completion).
	(3)   Landlord cannot exercise its remedies against Tenant so long as Leasehold Mortgagee (i) commences foreclosure of its lien on Tenant’s Leasehold Estate within 70 days after Leasehold Mortgagee’s receipt of the Default Notice, (ii) completes such foreclosure with reasonable diligence, and (iii) pays upon demand all amounts owing under the Lease.
	(4)   Alternatively, following an uncured event of Default by Tenant, Landlord may elect (i) to assume and agree to pay the outstanding balance owing under the loan documents as and when such balance becomes due and payable (together with any applicable penalty, premium, yield maintenance fee, assumption fee or other cost or expense), or (ii) to acquire from Leasehold Mortgagee the Leasehold Mortgage and Promissory Note for the unpaid balance thereof plus non-delinquent accrued interest (without late fees or charges for Default, but including any applicable prepayment penalty, premium or other charge, cost or expense).
	(5)   If the Lease is terminated by Tenant in bankruptcy or following a Tenant Default, Landlord will, after request provided in accordance with the Lease, enter into a new lease for the Premises with the Leasehold Mortgagee for the remainder of the Lease Term, without warranty of possession or quiet enjoyment by Landlord, and subject to the payment of all amounts due under the Lease.
	(6)   Foreclosure of a Leasehold Mortgage does not require Landlord consent, and upon such foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.
	(7)   A Leasehold Mortgages shall not be deemed to constitute an assignment or Transfer by Tenant.
Attornment	Landlord will permit a Leasehold Mortgage to provide that, upon foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.

H-4-34

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:  Ground Lease Agreement (the “Lease”) between The Charlotte-Mecklenburg Hospital Authority (the “Landlord”) and HR of Carolinas, LLC (the “Tenant”), dated as of December 29, 2008

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	704 Gold Hill Road, Fort Mill, South Carolina
Expiration Date	December 31, 2083
Renewals	Two ten-year Extension Periods
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	•   Tenant owns Improvements, subject to reversionary interest of Landlord.
	•   Air rights above the Improvements are reserved by Landlord.
Transfer of Leasehold Interest	•   Transfers do not include:
	(1)   Space Leases or subleases not otherwise prohibited;
	(2)   A Change in Ownership of Tenant or its Affiliate;
	(3)   The Transfer of an Interest, in whole or in part, to an Affiliate of Tenant;
	(4)   The conveyance of an ownership interest in Tenant to the , Investment Entity pursuant to the Side Letter Agreement;
	(5)   A conveyance of any ownership interest in the Investment Entity to any Person and by any Person; or
	(6)   The granting of a Leasehold Mortgage or any foreclosure or deed-in-lieu resulting therefrom or any conveyance to a purchaser at a foreclosure sale or deed-in-lieu thereof pursuant to a Leasehold Mortgage.
	•   Landlord’s consent is not required for an assignment to (i) an Affiliate of Tenant, (ii) a Qualified Person, or (iii) an Investment Entity.
	•   Landlord has a Right of First Offer on all Available Space for lease.
	•   Landlord has a Right of First Refusal on all Available Space for lease.
	•   Landlord has a Repurchase Right prior to the sale of any Interest by Tenant.
	•   Except as a result of a Change of Ownership of Tenant’s

H-4-35

Lease Provision	Summary
	corporate parent, and except to the extent of ownership interests in Tenant held by Investors or the Investment Entity, for 3 period of seven (7) years following the Lease Effective Date, neither Tenant nor any Affiliate of Tenant shall, within the boundaries of the county in which the Building is located, either:
	(1)   Own, construct, or develop any improvements located on any land owned or controlled by *; or
	(2)   Hold an equity interest in any property or development in which * also holds an equity interest.
Summary of Rights of Mortgagee	•   Any Leasehold Mortgagee must be either a qualified source meeting criteria acceptable to Landlord, including criteria relating to financial worth, stability, reputation and being a Qualified Person or an Institutional Lender.
	•   Insurance companies, public pension funds and retirement funds with a net worth of $50,000,000 or more are included in the definition of Institutional Lender.
	•   Tenant has the right to finance or refinance any debt secured by a Leasehold Mortgage so long as:
	(1)   the term of such financing does not extend beyond the Lease Expiration Date;
	(2)   the aggregate debt incurred in such financing does not exceed 90% of the appraised fair market value of Tenant’s Leasehold Estate;
	(3)   there is no mortgage balance at the end of the Lease Term; and
	(4)   such Leasehold Mortgage is subject to the terms of the Lease and subordinate to the rights of Landlord.
	•   Subject and subordinate to the Leasehold Mortgage, Tenant’s rights to all rent under the Space Leases are collaterally assigned to Landlord.
	•   Under no circumstances shall Landlord subordinate its interests in the Premises to the lien of any Leasehold Mortgagee.
	•   The Leasehold Mortgage must expressly prohibit the Leasehold Mortgagee from naming Landlord as a party in any foreclosure or other action relating to the Leasehold Mortgage or seeking a judgment against Landlord based upon the Leasehold Mortgage or any related instrument or document.
	•   Landlord will permit a Leasehold Mortgage to include the following terms:
	(1)   Any notice, demand, election or other communication that would adversely affect the Leasehold Mortgage from Landlord to Tenant must be delivered simultaneously to Leasehold Mortgagee.
	(2)   Leasehold Mortgagee has the right to cure any Default by Tenant within 45 days following receipt of Default Notice (or, if the Default cannot be cured within such 45-day period, Leasehold Mortgagee has promptly initiated the cure and diligently and continuously pursues it to

H-4-36

Lease Provision	Summary
	completion).
	(3)   Landlord cannot exercise its remedies against Tenant so long as Leasehold Mortgagee (i) commences foreclosure of its lien on Tenant’s Leasehold Estate within 70 days after Leasehold Mortgagee’s receipt of the Default Notice, (ii) completes such foreclosure with reasonable diligence, and (iii) pays upon demand all amounts owing under the Lease.
	(4)   Alternatively, following an uncured event of Default by Tenant, Landlord may elect (i) to assume and agree to pay the outstanding balance owing under the loan documents as and when such balance becomes due and payable (together with any applicable penalty, premium, yield maintenance fee, assumption fee or other cost or expense), or (ii) to acquire from Leasehold Mortgagee the Leasehold Mortgage and Promissory Note for the unpaid balance thereof plus non-delinquent accrued interest (without late fees or charges for Default, but including any applicable prepayment penalty, premium or other charge, cost or expense).
	(5)   If the Lease is terminated by Tenant in bankruptcy or following a Tenant Default, Landlord will, after request provided in accordance with the Lease, enter into a new lease for the Premises with the Leasehold Mortgagee for the remainder of the Lease Term, without warranty of possession or quiet enjoyment by Landlord, and subject to the payment of all amounts due under the Lease.
	(6)   Foreclosure of a Leasehold Mortgage does not require Landlord consent, and upon such foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.
	(7)   A Leasehold Mortgage shall not be deemed to constitute an assignment or Transfer by Tenant.
Attornment	Landlord will permit a Leasehold Mortgage to provide that, upon foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.

H-4-37

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:  Ground Lease Agreement (the “Lease”) between The Charlotte-Mecklenburg Hospital Authority (the “Landlord”) and HR of Carolinas, LLC (the “Tenant”), dated as of December 29, 2008

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	1628 East Morehead Street, Charlotte, North Carolina
Expiration Date	December 31, 2083
Renewals	Two ten-year Extension Periods
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	Tenant owns Improvements, subject to reversionary interest of Landlord.
Transfer of Leasehold Interest	•   Transfers do not include:
	(1)   Space Leases or subleases not otherwise prohibited;
	(2)   A Change in Ownership of Tenant or its Affiliate;
	(3)   The Transfer of an Interest, in whole or in part, to an Affiliate of Tenant;
	(4)   The conveyance of an ownership interest in Tenant to the Investment Entity pursuant to the Side Letter Agreement;
	(5)   A conveyance of any ownership interest in the Investment Entity to any Person and by any Person; or
	(6)   The granting of a Leasehold Mortgage or any foreclosure or deed-in-lieu resulting therefrom or any conveyance to a purchaser at a foreclosure sale or deed-in-lieu thereof pursuant to a Leasehold Mortgage.
	•   Landlord’s consent is not required for an assignment to (i) an Affiliate of Tenant, (ii) a Qualified Person, or (iii) an Investment Entity.
	•   Landlord has a Right of First Offer on all Available Space for lease.
	•   Landlord has a Right of First Refusal on all Available Space for lease.
	•   Landlord has a Repurchase Right prior to the sale of any Interest by Tenant.
	•   Except as a result of a Change of Ownership of Tenant’s corporate parent, and except to the extent of ownership.

H-4-38

Lease Provision	Summary
	interests in Tenant held by Investors or the Investment Entity, for a period of seven (7) years following the Lease Effective Date, neither Tenant nor any Affiliate of Tenant shall, within the boundaries of the county in which the Building is located, either:
	(l)   Own, construct, or develop any improvements located on any land owned or controlled by *; or
	(2)   Hold an equity interest in any property or development in which * also holds an equity interest.
Summary of Rights of Mortgagee	•   Any Leasehold Mortgagee must be either a qualified source meeting criteria acceptable to Landlord, including criteria relating to financial worth, stability, reputation and being a Qualified Person or an Institutional Lender.
	•   Insurance companies, public pension funds and retirement funds with a net worth of $50,000,000 or more are included in the definition of Institutional Lender.
	•   Tenant has the right to finance or refinance any debt secured by a Leasehold Mortgage so long as:
	(1)   the term of such financing does not extend beyond the Lease Expiration Date;
	(2)   the aggregate debt incurred in such financing does not exceed 90% of the appraised fair market value of Tenant’s Leasehold Estate;
	(3)   there is no mortgage balance at the end of the Lease Term; and
	(4)   such Leasehold Mortgage is subject to the terms of the Lease and subordinate to the rights of Landlord.
	•   Subject and subordinate to the Leasehold Mortgage, Tenant’s rights to all rent under the Space Leases are collaterally assigned to Landlord.
	•   Under no circumstances shall Landlord subordinate its interests in the Premises to the lien of any Leasehold Mortgagee.
	•   The Leasehold Mortgage must expressly prohibit the Leasehold Mortgagee from naming Landlord as a party in any foreclosure or other action relating to the Leasehold Mortgage or seeking a judgment against Landlord based upon the Leasehold Mortgage or any related instrument or document.
	•   Landlord will permit a Leasehold Mortgage to include the following terms:
	(1)   Any notice, demand, election or other communication that would adversely affect the Leasehold Mortgage from Landlord to Tenant must be delivered simultaneously to Leasehold Mortgagee.
	(2)   Leasehold Mortgagee has the right to cure any Default by Tenant within 45 days following receipt of Default Notice (or, if the Default cannot be cured within such 45-day period, Leasehold Mortgagee has promptly initiated the cure and diligently and continuously pursues it to completion).

H-4-39

Lease Provision	Summary
	(3)   Landlord cannot exercise its remedies against Tenant so long as Leasehold Mortgagee (i) commences foreclosure of its lien on Tenant’s Leasehold Estate within 70 days after Leasehold Mortgagee’s receipt of the Default Notice, (ii) completes such foreclosure with reasonable diligence, and (iii) pays upon demand all amounts owing under the Lease.
	(4)   Alternatively, following an uncured event of Default by Tenant, Landlord may elect (i) to assume and agree to pay the outstanding balance owing under the loan documents as and when such balance becomes due and payable (together with any applicable penalty, premium, yield maintenance fee, assumption fee or other cost or expense), or (ii) to acquire from Leasehold Mortgagee the Leasehold Mortgage and Promissory Note for the unpaid balance thereof plus non-delinquent accrued interest (without late fees or charges for Default, but including any applicable prepayment penalty, premium or other charge, cost or expense).
	(5)   If the Lease is terminated by Tenant in bankruptcy or following a Tenant Default, Landlord will, after request provided in accordance with the Lease, enter into a new lease for the Premises with the Leasehold Mortgagee for the remainder of the Lease Terra, without warranty of possession or quiet enjoyment by Landlord, and subject to the payment of all amounts due under the Lease.
	(6)   Foreclosure of a Leasehold Mortgage does not require Landlord consent, and upon such foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.
	(7)   A Leasehold Mortgage shall not be deemed to constitute an assignment or Transfer by Tenant.
Attornment	Landlord will permit a Leasehold Mortgage to provide that, upon foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.

H-4-40

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease: Ground Lease Agreement (the “Lease”) between Mercy Health Services, Inc. (the “Landlord”) and HR of Carolinas, LLC (the “Tenant”), dated as of December 29, 2008

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	Pineville Medical Plaza — 10650 Park Road, Pineville, North Carolina
Expiration Date	December 31, 2083
Renewals	Two ten-year Extension Periods
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	•     Tenant owns Improvements, subject to reversionary interest of Landlord.
	•     Air rights above the Improvements are reserved by Landlord.
Transfer of Leasehold Interest	•     Transfers do not include:
	(1)    Space Leases or subleases not otherwise prohibited;
	(2)     A Change in Ownership of Tenant or its Affiliate;
	(3)     The Transfer of an Interest, in whole or in part, to an Affiliate of Tenant;
	(4)     The conveyance of an ownership interest in Tenant to the Investment Entity pursuant to the Side Letter Agreement;
	(5)     A conveyance of any ownership interest in the Investment Entity to any Person and by any Person; or
	(6)     The granting of a Leasehold Mortgage or any foreclosure or deed-in-lieu resulting therefrom or any conveyance to a purchaser at a foreclosure sale or deed-in-lieu thereof pursuant to a Leasehold Mortgage.
	•     Landlord’s consent is not required for an assignment to (i) an Affiliate of Tenant, (ii) a Qualified Person, or (iii) an Investment Entity.
	•     Landlord has a Right of First Offer on all Available Space for lease.
	•     Landlord has a Right of First Refusal on all Available Space for lease.
	•     Landlord has a Repurchase Right prior to the sale of any Interest by Tenant.
	•     Except as a result of a Change of Ownership of Tenant’s

H-4-41

Lease Provision	Summary
	corporate parent, and except to the extent of ownership interests in Tenant held by Investors or the Investment Entity, for a period of seven (7) years following the Lease Effective Date, neither Tenant nor any Affiliate of Tenant shall, within the boundaries of the county in which the Building is located, either:
	(l)     Own, construct, or develop any improvements located on any land owned or controlled by *; or
	(2)     Hold an equity interest in any property or development in which * also holds an equity interest.
Summary of Rights of Mortgagee	•     Any Leasehold Mortgagee must be either a qualified source meeting criteria acceptable to Landlord, including criteria relating to financial worth, stability, reputation and being a Qualified Person or an Institutional Lender.
	•     Insurance companies, public pension funds and retirement funds with a net worth of $50,000,000 or more are included in the definition of Institutional Lender.
	•     Tenant has the right to finance or refinance any debt secured by a Leasehold Mortgage so long as:
	(l)     the term of such financing does not extend beyond the Lease Expiration Date;
	(2)     the aggregate debt incurred in such financing does not exceed 90% of the appraised fair market value of Tenant’s Leasehold Estate;
	(3)     there is no mortgage balance at the end of the Lease Term; and
	(4)     such Leasehold Mortgage is subject to the terms of the Lease and subordinate to the rights of Landlord.
	•     Subject and subordinate to the Leasehold Mortgage, Tenant’s rights to all rent under the Space Leases are collaterally assigned to Landlord.
	•     Under no circumstances shall Landlord subordinate its interests in the Premises to the lien of any Leasehold Mortgagee.
	•     The Leasehold Mortgage must expressly prohibit the Leasehold Mortgagee from naming Landlord as a party in any foreclosure or other action relating to the Leasehold Mortgage or seeking a judgment against Landlord based upon the Leasehold Mortgage or any related instrument or document.
	•     Landlord will permit a Leasehold Mortgage to include the following terms:
	(1)     Any notice, demand, election or other communication that would adversely affect the Leasehold Mortgage from Landlord to Tenant must be delivered simultaneously to Leasehold Mortgagee.
	(2)     Leasehold Mortgagee has the right to cure any Default by Tenant within 45 days following receipt of Default Notice (or, if the Default cannot be cured within such 45-day period, Leasehold Mortgagee has promptly initiated the cure and diligently and continuously pursues it to

H-4-42

Lease Provision	Summary
	completion).
	(3)     Landlord cannot exercise its remedies against Tenant so long as Leasehold Mortgagee (i) commences foreclosure of its lien on Tenant’s Leasehold Estate within 70 days after Leasehold Mortgagee’s receipt of the Default Notice, (ii) completes such foreclosure with reasonable diligence, and (iii) pays upon demand all amounts owing under the Lease.
	(4)     Alternatively, following an uncured event of Default by Tenant, Landlord may elect (i) to assume and agree to pay the outstanding balance owing under the loan documents as and when such balance becomes due and payable (together with any applicable penalty, premium, yield maintenance fee, assumption fee or other cost or expense), or (ii) to acquire from Leasehold Mortgagee the Leasehold Mortgage and Promissory Note for the unpaid balance thereof plus non-delinquent accrued interest (without late fees or charges for Default, but including any applicable prepayment penalty, premium or other charge, cost or expense).
	(5)     If the Lease is terminated by Tenant in bankruptcy or following a Tenant Default, Landlord will, after request provided in accordance with the Lease, enter into a new lease for the Premises with the Leasehold Mortgagee for the remainder of the Lease Term, without warranty of possession or quiet enjoyment by Landlord, and subject to the payment of all amounts due under the Lease.
	(6)     Foreclosure of a Leasehold Mortgage does not require Landlord consent, and upon such foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.
	(7)     A Leasehold Mortgage shall not be deemed to constitute an assignment or Transfer by Tenant.
Attornment	Landlord will permit a Leasehold Mortgage to provide that, upon foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.

H-4-43

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:   Ground Lease Agreement. (the “Lease”) between The Charlotte-Mecklenburg Hospital Authority (the “Landlord”) and HR of Carolinas, LLC (the “Tenant”), dated as of December 29, 2008

Defined, terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease; This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	10545 Blair Road, Mint Hill, North Carolina
Expiration Date	December 31, 2083
Renewals	Two ten-year Extension Periods
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	Tenant owns Improvements, subject to reversionary interest of Landlord.
Transfer of Leasehold Interest	•   Transfers do not include:
	(1)   Space Leases or subleases not otherwise prohibited;
	(2)   A Change in Ownership of Tenant or its Affiliate;
	(3)   The Transfer of an Interest, in whole or in part, to an Affiliate of Tenant;
	(4)   The conveyance of an ownership interest in Tenant to the Investment Entity pursuant to the Side Letter Agreement;
	(5)   A conveyance of any ownership interest in the Investment Entity to any Person and by any Person; or
	(6)   The granting of a Leasehold Mortgage or any foreclosure or deed-in-lieu resulting therefrom or any conveyance to a purchaser at a foreclosure sale or deed-in-lieu thereof pursuant to a Leasehold Mortgage.
	•   Landlord’s consent is not required for an assignment to (i) an Affiliate of Tenant, (ii) a Qualified Person, or (iii) an Investment Entity.
	•   Landlord has a Right of First Offer on all Available Space for lease.
	•   Landlord has a Right of First Refusal on all Available Space for lease.
	•   Landlord has a Repurchase Right prior to the sale of any Interest by Tenant.
	•   Except as a result of a Change of Ownership of Tenant’s corporate parent, and except to the extent of ownership

H-4-44

Lease Provision	Summary
	interests in Tenant held by Investors or the Investment Entity, for a period of seven (7) years following the Lease Effective Date, neither Tenant nor any Affiliate of Tenant shall, within the boundaries of the county in which the Building is located, either:
	(l)   Own, construct, or develop any improvements located on any land owned or controlled by *; or
	(2)   Hold an equity interest in any property or development in which * also holds an equity interest.
Summary of Rights of Mortgagee	•   Any Leasehold Mortgagee must be either a qualified source meeting criteria acceptable to Landlord, including criteria relating to financial worth, stability, reputation and being a Qualified Person or an Institutional Lender.
	•   Insurance companies, public pension funds and retirement funds with a net worth of $50,000,000 or more are included in the definition of Institutional Lender.
	•   Tenant has the right to finance or refinance any debt secured by a Leasehold Mortgage so long as:
	(l)   the term of such financing does not extend beyond the Lease Expiration Date;
	(2)   the aggregate debt incurred in such financing does not exceed 90% of the appraised fair market value of Tenant’s Leasehold Estate;
	(3)   there is no mortgage balance at the end of the Lease Term; and
	(4)    such Leasehold Mortgage is subject to the terms of the Lease and subordinate to the rights of Landlord.
	•   Subject and subordinate to the Leasehold Mortgage, Tenant’s rights to all rent under the Space Leases are collaterally assigned to Landlord.
	•   Under no circumstances shall Landlord subordinate its interests in the Premises to the lien of any Leasehold Mortgagee.
	•   The Leasehold Mortgage must expressly prohibit the Leasehold Mortgagee from naming Landlord as a party in any foreclosure or other action relating to the Leasehold Mortgage or seeking a judgment against Landlord based upon the Leasehold Mortgage or any related instrument or document.
	•    Landlord will permit a Leasehold Mortgage to include the following terms:
	(1)   Any notice, demand, election or other communication that would adversely affect the Leasehold Mortgage from Landlord to Tenant must be delivered simultaneously to Leasehold Mortgagee.
	(2)   Leasehold Mortgagee has the right to cure any Default by Tenant within 4 5 days following receipt of Default Notice (or, if the Default cannot be cured within such 45-day period, Leasehold Mortgagee has promptly initiated the cure and diligently and continuously pursues it to completion).

H-4-45

Lease Provision	Summary
	(3)   Landlord cannot exercise its remedies against Tenant so long as Leasehold Mortgagee (i) commences foreclosure of its lien on Tenant’s Leasehold Estate within 70 days after Leasehold Mortgagee’s receipt of the Default Notice, (ii) completes such foreclosure with reasonable diligence, and (iii) pays upon demand all amounts owing under the Lease.
	(4)   Alternatively, following an uncured event of Default by Tenant, Landlord may elect (i) to assume and agree to pay the outstanding balance owing under the loan documents as and when such balance becomes due and payable (together with any applicable penalty, premium, yield maintenance fee, assumption fee or other cost or expense), or (ii) to acquire from Leasehold Mortgagee the Leasehold Mortgage and Promissory Note for the unpaid balance thereof plus non-delinquent accrued interest (without late fees or charges for Default, but including any applicable prepayment penalty, premium or other charge, cost or expense).
	(5)   If the Lease is terminated by Tenant in bankruptcy or following a Tenant Default, Landlord will, after request provided in accordance with the Lease, enter into a new lease for the Premises with the Leasehold Mortgagee for the remainder of the Lease Term, without warranty of possession or quiet enjoyment by Landlord, and subject to the payment of all amounts due under the Lease.
	(6)   Foreclosure of a Leasehold Mortgage does not require Landlord consent, and upon such foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.
	(7)   A Leasehold Mortgage shall not be deemed to constitute an assignment or Transfer by Tenant.
Attornment	Landlord will permit a Leasehold Mortgage to provide that, upon foreclosure, Landlord must recognize Leasehold Mortgagee or its designee as Tenant under the Lease, provided Leasehold Mortgagee assumes the Lease in writing and cures all Defaults.

H-4-46

EX. H-5
INS. / CONDEMNATION

EXHIBIT H — 5

INSURANCE PROCEEDS AND CONDEMNATION AWARDS FOR
RESTORATION — CONDITIONS TO USE

     The terms of the applicable ground leases shall govern the application of insurance proceeds and condemnation awards (the “Proceeds”) payable with the respect to the Property during the Term, provided that, to the extent permitted by the applicable ground leases, the Loan Documents will permit Lender to apply Proceeds against the Loan subject to the following provisions to be included in the Loan Documents:

     (a) Notwithstanding the foregoing, after a casualty or a condemnation (a “Destruction Event”), Lender will make the Proceeds (less any costs incurred by Lender in collecting the Proceeds) available for restoration in accordance with the conditions for disbursements set forth in the Loan Documents, provided that the following conditions are met:

     (i) Borrower or the transferee under a permitted transfer, if any, continues to be Borrower at the time of the Destruction Event and at all times thereafter until the Proceeds have been fully disbursed;

     (ii) no default under the Loan Documents exists at the time of the Destruction Event and no event of default has occurred during the 12 months prior to the Destruction Event;

     (iii) all leases in effect immediately prior to the Destruction Event continue in full force and effect notwithstanding the Destruction Event, except as otherwise approved by Lender;

     (iv) if the Destruction Event is a condemnation, Borrower delivers to Lender evidence satisfactory to Lender that the Improvements can be restored to an economically and architecturally viable unit;

     (v) Borrower delivers to Lender evidence satisfactory to Lender that the Proceeds are sufficient to complete such restoration or if the Proceeds are insufficient to complete such restoration, Borrower first deposits with Lender funds (the “Additional Funds”) that when added to the Proceeds will be sufficient to complete such restoration;

     (vi) if the Destruction Event is a casualty, Borrower delivers to Lender evidence satisfactory to Lender that the insurer under each affected insurance policy has not denied liability under such policy as to Borrower or the insured under such policy;

     (vii) Lender is satisfied that the proceeds of any rent loss insurance in effect together with other available gross revenues from the Property are sufficient to pay debt service payments after paying taxes and assessments, insurance premiums, reasonable and customary

H-5-1

operating expenses and capital expenditures until the restoration is complete;

     (viii) Lender is satisfied that the restoration will be completed on or before the date (the “Restoration Completion Date”) that is the earliest of: (A) 12 months prior to the expiration of the then-existing Term; (B) 12 months after the Destruction Event; (C) the earliest date required for completion of restoration under any lease affecting the Property; or (D) any date required by Law; and

     (ix) for the 12-month period immediately preceding the Destruction Event, the annual Debt Service Coverage was at least 1.15x and, at the time of the Destruction Event, is at least 1.15x, provided that, if the Net Operating Income does not provide such Debt Service Coverage, Borrower expressly authorizes and instructs Lender (at Lender’s sole discretion) to apply an amount from the Proceeds to reduction of the outstanding principal amount of the Loan in order to reduce the annual debt service payments sufficiently for such Debt Service Coverage to be achieved. The reduced debt service payments will be calculated using the Fixed Interest Rate and an amortization schedule that will achieve the same proportionate amortization of the reduced principal over the then-remaining Term as would have been achieved if the principal and the originally scheduled debt service payments had not been reduced. Borrower will execute any documentation that Lender deems reasonably necessary to evidence the reduced principal and debt service payments.

     (b) If the total Proceeds for any Destruction Event are $250, 000 or less and Lender elects or is obligated by Law or under the Loan Documents to make the Proceeds available for restoration, Lender will disburse to Borrower the entire amount received by Lender, and Borrower will commence restoration promptly after the Destruction Event and complete restoration not later than the Restoration Completion Date.

     (c) If the Proceeds for any Destruction Event exceed $250,000 and Lender elects or is obligated by Law or under the Loan Documents to make the Proceeds available for restoration, Lender will disburse the Proceeds and any required additional funds (the “Restoration Funds”) upon Borrower’s request as restoration progresses, generally in accordance with normal construction lending practices for disbursing funds for construction costs, provided that the following conditions are met:

     (i) Borrower commences restoration, promptly after the Destruction Event and completes restoration on or before the Restoration Completion Date;

     (ii) if Lender requests, Borrower delivers to Lender prior to commencing restoration, for Lender’s approval, plans and specifications and a detailed budget for the restoration;

H-5-2

     (iii) Borrower delivers to Lender satisfactory evidence of the costs of the restoration incurred prior to the date of the request and such other documents as Lender may request, including mechanics’ lien waivers and title insurance endorsements;

     (iv) Borrower pays all costs of restoration whether or not the Restoration Funds are sufficient and, if at any time during the restoration, Lender determines that the undisbursed balance of the Restoration Funds is insufficient to complete restoration, Borrower deposits with Lender, as part of the Restoration Funds, an amount equal to the deficiency within 30 days after receiving notice of the deficiency from Lender; and

     (v) there is no default under the Loan Documents at the time Borrower requests funds or at the time Lender disburses funds.

     (d) If an event of default under the Loan Documents occurs at any time after the Destruction Event, then Lender will have no further obligation to make any remaining Proceeds available for restoration and may apply any remaining Proceeds as a credit against any portion of the Loan selected by Lender in its sole discretion.

     (e) Lender may elect at any time prior to or during the course of restoration to retain, at Borrower’s expense, an independent engineer or other environmental consultant to review the plans and specifications, to inspect restoration as it progresses and to provide reports. If any matter included in a report by the engineer or consultant is unsatisfactory to Lender, Lender may suspend disbursement of the Restoration Funds until the unsatisfactory matters contained in the report are resolved to Lender’s satisfaction.

     (f) If Borrower fails to commence and complete restoration in accordance with the terms of the Loan Documents, then in addition to any other remedies available to Lender, Lender may elect to restore the Improvements on Borrower’s behalf and reimburse itself out of the Restoration Funds for costs and expenses incurred by Lender in restoring the Improvements or Lender may apply the Restoration Funds as a credit against any portion of the Loan selected by Lender in its sole discretion.

     (g) Lender may commingle the Restoration Funds with its general assets and will not be liable to pay any interest or other return on the Restoration Funds unless otherwise required by Law. Lender will not hold any Restoration Funds in trust. Lender may elect to deposit the Restoration Funds with a depository satisfactory to Lender under a disbursement and security agreement satisfactory to Lender.

     (h) Borrower will pay all of Lender’s expenses incurred in connection with a Destruction Event or restoration. If Borrower fails to do so, then in addition to any other remedies available to Lender, Lender may from time to time reimburse itself out of the Restoration Funds.

H-5-3

     (i) If any excess Proceeds remain after restoration, Lender may elect, in its sole discretion, either to apply the excess as a credit against any portion of the Loan as selected by Lender in its sole discretion or to deliver the excess to Borrower.

     (j) No Prepayment Premium or Evasion of Prepayment Premium shall be due in connection with any prepayment of the Loan from Proceeds.

H-5-4

EX. H - 6
LIMIT. LIAB.

EXHIBIT H — 6

LIMITATION OF LIABILITY

     The Loan Documents will include the following provisions relating to the limitation of Borrower’s liability:

     (a) Notwithstanding any provision in the Loan Documents to the contrary, except as set forth in paragraphs (b) and (c) of this Exhibit H-6, if Lender seeks to enforce the collection of the Loan, Lender will foreclose its mortgage/deed of trust instead of instituting suit on the note or other instrument evidencing the Loan. If a lesser sum is realized from a foreclosure of the mortgage/deed of trust and the sale of the Property than the then-outstanding amount owed under the Loan, Lender will not institute any suit or proceeding against Borrower or Borrower’s general partners, if any, for or on account of the deficiency, except as set forth in paragraphs (b) and (c) of this Exhibit H-6.

     (b) The limitation of liability in paragraph (a) of this Exhibit H-6 will not affect or impair (i) the lien of the mortgage/deed of trust or Lender’s other rights and remedies under the Loan Documents, including Lender’s right as mortgagee or secured party to commence an action to foreclose any lien or security interest Lender has under the Loan Documents; (ii) the validity of the Loan Documents or the obligations evidenced thereby; (iii) Lender’s rights under any Loan Documents that are not expressly non-recourse; or (iv) Lender’s right to present and collect on any letter of credit or other credit enhancement document held by Lender in connection with the obligations evidenced by the Loan Documents.

     (c) The following are excluded and excepted from the limitation of liability in paragraph (a) of this Exhibit H-6 and Lender may recover personally against Guarantor and Borrower and its general partners, if any, for the following:

     (i) all losses suffered and liabilities and expenses incurred by Lender relating to any fraud, intentional misrepresentation or omission by Borrower or any of Borrower’s partners, members, officers, directors, shareholders or principals in connection with (A) the performance of any of the conditions to Lender making the Loan; (B) any inducements to Lender to make the Loan; (C) the execution and delivery of the Loan Documents; (D) any certificates, representations or warranties given in connection with the Loan; or (E) Borrower’s performance of the obligations evidenced by the Loan Documents;

     (ii) all rents derived from the Property after an event of default under the Loan Documents which event of default is a basis of a proceeding by Lender to enforce the collection of the Loan and all moneys that, on the date such event of default occurs, are on deposit in one or more accounts used by or on behalf of Borrower relating to the operation of the Property, except to the extent properly applied to payment of debt service payments, taxes and assessments, insurance

H-6-1

premiums and any reasonable and customary expenses incurred by Borrower in the operation, maintenance and leasing of the Property or delivered to Lender directly or pursuant to the Lock-Box Agreement;

     (iii) the cost of remediation of any Environmental Activity affecting the Property, any diminution in the value of the Property arising from any Environmental Activity affecting the Property and any other losses suffered and any other liabilities and expenses incurred by Lender arising from a default under the provisions of the mortgage/deed of trust substantially in the form of Exhibit H-6A, Part I (and as mutually agreed to by Lender and Borrower);

     (iv) all security deposits collected by Borrower or any of Borrower’s predecessors and not refunded to tenants in accordance with their respective leases, applied in accordance with the leases or Law or delivered to Lender, and all tenant letters of credit and advance rents collected by Borrower or any of Borrower’s predecessors and not applied in accordance with the leases or delivered to Lender directly or pursuant to the Lock-Box Agreement;

     (v) any fee paid upon the termination of a lease affecting the Property received by Borrower which is not paid to Lender (or an escrow agent selected by Lender) to the extent required under the terms and conditions of the Loan Documents;

     (vi) the replacement cost of any fixtures and personal property owned by Borrower and removed from the Property by Borrower after an event of default occurs;

     (vii) all losses suffered and liabilities and expenses incurred by Lender relating to any acts or omissions by Borrower that result in waste (including economic and non-physical waste) on the Property;

     (viii) all protective advances and other payments made by Lender pursuant to express provisions of the Loan Documents after the occurrence and during the continuance of a default thereunder to protect Lender’s security interest in the Property or to protect the assignment of the property effected by the Loan Documents;

     (ix) all mechanics’ or similar liens relating to work performed on or materials delivered to the Property prior to Lender’s exercising its remedies under the Loan Documents but only to the extent Lender had advanced funds to pay for the work or materials;

     (x) all Proceeds that are not applied in accordance with the Loan Documents;

     (xi) all losses suffered and liabilities and expenses incurred by Lender relating to the forfeiture or threatened forfeiture of the Property to a governmental authority;

H-6-2

     (xii) all losses suffered and liabilities and expenses incurred by Lender relating to any default by Borrower under any of the provisions of the mortgage/deed of trust relating to ERISA;

     (xiii) all losses suffered and liabilities and expenses incurred by Lender relating to any default under any of the provisions of the mortgage/deed of trust relating to anti-terrorism or money laundering;

     (xiv) all losses suffered and liabilities and expenses incurred by Lender relating to any default by Borrower under the provisions of the mortgage/deed of trust requiring Borrower to provide prior notice to Lender of any change in Borrower’s legal name, place of business or state of organization;

     (xv) all losses suffered and liabilities and expenses incurred by Lender relating to the failure to maintain, or to pay the premiums for, any insurance required to be maintained under the Loan Documents; and

     (xvi) all losses suffered and liabilities and reasonable expenses incurred by Lender in connection with any default by Borrower beyond any applicable grace and cure period under any ground leases affecting the Property (including any master ground leases, as applicable) under which Borrower is the tenant or any violation of any covenant contained in the mortgage/deed of trust substantially in the form set forth in Exhibit H-6A, Part II (and as mutually agreed to by Lender and Borrower) or in connection with a termination of any ground lease affecting the Property (but with respect to any default caused by the failure to pay rent under any such ground lease, only to the extent that there exists or existed sufficient funds from the operation of the Property for the payment thereof).

Notwithstanding the foregoing, the limitation of liability set forth in paragraph (a) of this Exhibit H-6 SHALL BECOME NULL AND VOID and shall be of no further force and effect and Lender may recover personally against Borrower and its general partners, if any, in the event of (i) a voluntary bankruptcy or insolvency proceeding of Borrower filed without the prior consent of Lender if such proceeding is not dismissed in accordance with the terms of the mortgage/deed of trust, (ii) an involuntary bankruptcy or insolvency proceeding of Borrower, in which Borrower, any of its principals, officers, general partners or members, or Guarantor colludes with creditors in such bankruptcy or insolvency proceeding if such proceeding is not dismissed in accordance with the terms of the mortgage/deed of trust, (iii) an event of default occurs under any of the covenants or requirements contained in the mortgage/deed of trust relating to maintenance and operation of Borrower as a Special Purpose Entity, or (iv) a transfer of the Property that is not permitted under the mortgage/deed of trust, including the prohibition on any transfer that results in a violation of ERISA, money-laundering laws or the Anti-Terrorism Laws.

H-6-3

     (d) Nothing under paragraph (a) of this Exhibit H-6 will be deemed to be a waiver of any right which Lender may have under Sections 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code or under any other Law relating to bankruptcy or insolvency to file a claim for the full amount of the Loan or to require that all collateral will continue to secure all of the obligations evidenced by the Loan Documents in accordance therewith.

H-6-4

EX. H-6A
LIMIT. LIAB.

EXHIBIT H — 6A

MORTGAGE/DEED OF TRUST PROVISIONS

Part I:

Environmental Representations.

     Except as disclosed in the Environmental Report and to Borrower’s knowledge as of the date of this Deed of Trust:

     (i) no Environmental Activity has occurred or is occurring on the Property other than the use, storage, and disposal of Hazardous Materials which (A) are in the ordinary course of business consistent with the Permitted Use; (B) are in compliance with all Environmental Laws and (C) have not resulted in Material Environmental Contamination of the Property; and

     (ii) no Environmental Activity has occurred or is occurring on any property in the vicinity of the Property which has resulted in Material Environmental Contamination of the Property.

Environmental Covenants.

(a)	Borrower will not cause or knowingly permit any Material Environmental Contamination of the Property.
(b)	Borrower will not cause or knowingly permit any Environmental Activity to occur on the Property other than the use, storage and disposal of Hazardous Materials which (A) are in the ordinary course of business consistent with the Permitted Use; (B) are in compliance with all Environmental Laws; and (C) do not create a risk of Material Environmental Contamination of the Property.
(c)	Borrower will notify Lender immediately upon Borrower becoming aware of (i) any Material Environmental Contamination of the Property or (ii) any Environmental Activity with respect to the Property that is not in accordance with the preceding subsection (b). Borrower promptly will deliver to Lender copies of all documents delivered to or received by Borrower regarding the matters set forth in this subsection, including notices of Proceedings or investigations concerning any Material Environmental Contamination of the Property or Environmental Activity or concerning Borrower’s status as a potentially responsible party (as defined in the Environmental Laws). Borrower’s notification of Lender in accordance with the provisions of this subsection will not be deemed to excuse any default under the Loan Documents resulting from the violation of Environmental Laws or the Material Environmental Contamination of the Property or Environmental Activity that is the subject of the notice. If Borrower receives

H-6-5

	notice of a suspected violation of Environmental Laws in the vicinity of the Property that poses a risk of Material Environmental Contamination of the Property, Borrower will give Lender notice and copies of any documents received relating to such suspected violation.
(d)	From time to time at Lender’s request, Borrower will deliver to Lender any information known and documents available to Borrower relating to the environmental condition of the Property.
(e)	Lender may perform or engage an independent consultant to perform an assessment of the environmental condition of the Property and of Borrower’s compliance with this Section on an annual basis, or at any other time for reasonable cause, or after an Event of Default. In connection with the assessment: (i) Lender or consultant may enter and inspect the Property and perform tests of the air, soil, ground water and building materials; (ii) Borrower will cooperate and use best efforts to cause tenants and other occupants of the Property to cooperate with Lender or consultant, subject to the terms of such tenants’ respective leases and applicable law; (iii) Borrower will receive a copy of any final report prepared after the assessment, to be delivered to Borrower not more than 10 days after Borrower requests a copy and executes Lender’s standard confidentiality and waiver of liability letter; (iv) Borrower will accept custody of and arrange for lawful disposal of any Hazardous Materials required to be disposed of as a result of the tests; (v) Lender will not have liability to Borrower with respect to the results of the assessment; and (vi) Lender will not be responsible for any damage to the Property resulting from the tests described in this subsection and Borrower will look solely to the consultant to reimburse Borrower for any such damage. The consultant’s assessment and reports will be at Borrower’s expense (i) if the reports disclose any material adverse change in the environmental condition of the Property from that disclosed in the Environmental Report; (ii) if Lender engaged the consultant when Lender had reasonable cause to believe Borrower was not in compliance with the terms of this Section and, after written notice from Lender, Borrower failed to provide promptly reasonable evidence that Borrower is in compliance; or (iii) if Lender engaged the consultant after the occurrence of an Event of Default.

If Lender has reasonable cause to believe that there is Environmental Activity at the Property, Lender may elect in its sole discretion to release from the lien of this Deed of Trust any portion of the Property affected by the Environmental Activity and Borrower will accept the release.

H-6-6

Part II:

Ground Lease Provisions. *

(a)	The Ground Lease is in full force and effect has not been amended and represents the entire agreement between Borrower and Ground Lessor and there are no defaults, events of default or events which with the passage of time or the giving of notice, would constitute a default or event of default under the Ground Lease.
(b)	Borrower will pay the Ground Rent as and when required under the Ground Lease and will perform all of Borrower’s obligations as ground lessee tinder the Ground Lease as and when required, under the Ground Lease.
(c)	Borrower will cause Ground Lessor to pay and perform all of Ground Lessor’s obligations under the Ground Lease as and when required under the Ground Lease, will not give any approval required or permitted under the Ground Lease without Lender’s prior approval and will not exercise any options under the Ground Lease without Lender’s prior approval.
(d)	Borrower will not amend ox waive any provisions of the Ground Lease; cancel or surrender the Ground Lease; or release or discharge Ground Lessor from any of the terms or obligations of the Ground Lease, without in each instance Lender’s prior approval which may be withheld in its sole discretion.
(e)	Borrower promptly will deliver to Lender copies of any notices of default or of termination that Borrower receives or delivers relating to the Ground Lease.
(f)	Without limiting Lender’s independent rights and remedies under Section 365(h) of the Bankruptcy Code:

(i)	Borrower will not elect to treat the Ground Lease as terminated under Subsection 365 (h) (1) of the Bankruptcy Code without Lender’s prior consent to be exercised in its sole discretion, any such election made without Lender’s prior consent is null and void;
(ii)	Without in any manner limiting the provisions of subparagraph (i) of this Section, the lien of this Deed of Trust will attach to all of

H-6-7

	Borrower’s rights and remedies at any time arising under or pursuant to Subsection 365(h) of the Bankruptcy Code, including all of Borrower’s rights to remain in possession of the Property and Lender may assert, or direct Borrower to assert, any of such rights and remedies.
(iii)	If, pursuant to Subsection 365(h) of the Bankruptcy Code, Borrower seeks to offset against Ground Rent the amount of any damages caused by Ground Lessor’s failure to perform any of its obligations under the Ground Lease after the Ground Lessor rejects the Ground Lease under the Bankruptcy Code, Borrower will, prior to effecting such offset, notify Lender of its intent to do so, setting forth the amount proposed to be so offset and the basis therefor. Lender will have the right to object to all or any part of such offset and, in the event of such objection, Borrower will not effect any offset of the amount so objected to by Lender. Neither Lender’s failure to object as aforesaid nor any objection or other communication between Lender and Borrower relating to such offset will constitute an approval of any such offset by Lender. Borrower will indemnify, defend and save Lender harmless from and against any and all claims, demands, actions, suits, proceedings, damages, losses, costs and expenses of every nature whatsoever (including attorneys’ fees) arising from or relating to any offset by Borrower against the rent reserved in the Ground Lease.
(iv)	Borrower unconditionally assigns, transfers and sets over to Lender all of Borrower’s claims and rights to the payment of damages arising from any rejection by Ground Lessor of the Ground Lease under the Bankruptcy Code. Lender will have the right to proceed in its own name or in the name of Borrower in respect of any claim, suit, action or proceeding relating to the rejection of the Ground Lease, including the right to file and prosecute, to the exclusion of Borrower, any proofs of claim, complaints, motions, application, notice and other documents, in any case in respect of Ground Lessor under the Bankruptcy Code. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing

H-6-8

	claims, rights and remedies, and will continue in effect until all of the indebtedness and obligations secured by this Deed of Trust will have been satisfied and discharged in full. Any amounts received by Lender as damages arising out of the rejection of the Ground Lease as aforesaid will be applied first to all costs and expenses of Lender (including attorneys’ fees) incurred in connection with the exercise of any of its rights or remedies under this subsection (iv) and then in accordance with subsection (iii) of this Section.
(v)	In any Proceeding under the Bankruptcy Code relating to the Ground Lease or the Property, Borrower will appear in the Proceeding and will protect Lender’s interests in the Property and under the Loan Documents with attorneys and other professionals retained by Borrower and approved by Lender. Lender may elect, in Lender’s sole discretion, to engage its own attorneys and other professionals at Borrower’s expense to appear in the Proceeding and to protect Lender’s interests in the Property and under the Loan Documents. Borrower will not commence any Proceeding, file any application or make any motion relating to the Ground Lease in any Proceeding in its sole discretion under the Bankruptcy Code without Lender’s prior consent.
(vi)	Borrower will give Lender prompt notice of any filing by or against Ground Lessor or Borrower of a Proceeding under the Bankruptcy Code. The notice will set forth any information available to Borrower about the proceeding, including the date of the filing, the court in which the Proceeding was filed, and the relief sought. Borrower also will deliver to Lender, promptly following Borrower’s receipt thereof, any notices, summonses, pleadings, applications and other documents received by Borrower in connection with the Proceeding.
(vii)	If a Proceeding under the Bankruptcy Code is commenced by or against Borrower and Borrower, as lessee under the Ground Lease, rejects the Ground Lease pursuant to Section 365(a) of the Bankruptcy Code without giving Lender not less than 10 Business Days’ prior notice of the date on which Borrower will apply to the bankruptcy court for authority to reject the Ground Lease.

H-6-9

Lender may, in its sole discretion, give Borrower notice within such 10-Business Day period stating that (a) Lender demands that Borrower assume the Ground Lease and assign it to Lender pursuant to Section 365 of the Bankruptcy Code and (b) Lender will cure or provide adequate assurance of prompt cure of all defaults and will provide adequate assurance of future performance under the Ground Lease. In that event, Borrower will not seek to reject the Ground Lease and will comply with the demand provided for in (a) above within 30 days after Lender’s notice was given provided Lender performs its obligations under (b) above.

Effective upon the entry of an order for relief in respect of Borrower under Chapter 7 of the Bankruptcy Code, Borrower hereby assigns and transfers to Lender a non-exclusive right to apply to the bankruptcy court under Subsection 365(d)(1) of the Bankruptcy Code for an order extending the period during which the Ground Lease may be rejected or assumed.

* Note that for the properties commonly known as CMC Morrocroft I and CMC Morrocroft II, the parties agree and acknowledge that (i) the foregoing Ground Lease provisions shall be revised to apply to the Ground Subleases (defined below) (and all references to the fee owner or ground lessor therein shall be revised to reference the ground sublessor), and (ii) upon. Lender’s complete review of the Master Ground Lease (defined below) and the Ground Subleases (and all other documentation related thereto), Lender may include additional Borrower representations and warranties related to the Master Ground Lease as Lender deems reasonably necessary.

“Master Ground Lease” shall mean that certain Lease Agreement dated December 7, 1995, by and between The Carolinas Healthcare Foundation, Inc., a North Carolina nonprofit corporation (“CHF”), and The Charlotte-Mecklenburg Hospital Authority, a North Carolina body corporate and politic (“CMHA”), and all amendments thereto.

“Ground Subleases” shall mean those two certain Lease Agreements dated as of December 31, 2008, by and between CHF and CMHA and Borrower, and all amendments thereto, relating to the properties known as CMC Morrocroft I and CMC Morrocroft II, respectively.

H-6-10

EX. H-7
LOCK-BOX

EXHIBIT H — 7

LOCK-BOX REQUIREMENTS

     At Closing, Borrower will execute an agreement (the “Lock-Box Agreement”) satisfactory to Lender providing for the establishment of an account and sub-accounts (collectively, the “Deposit Account”). The Lock-Box Agreement will include the following provisions:

     (a) On the date of Closing, all revenues from the Property will thereafter be deposited directly into the Deposit Account and disbursed in accordance with the Lock-Box Agreement. The Lock-Box Agreement shall provide that upon a Trigger Event (defined herein), including Borrower’s failure to pay the Loan on or prior to the maturity date of the Loan, Lender will give the administrator of the Deposit Account notice and all funds shall be applied to Lender’s payment “waterfall” prior to any funds being disbursed to Borrower, provided that, while any event of default under the Loan Documents is continuing, Lender will retain the right to declare the Loan immediately due and payable and to exercise all other remedies under the Loan Documents.

     (b) The Deposit Account will be maintained in Lender’s name at a depository institution satisfactory to Lender.

     (c) Lender will have a first priority perfected security interest in the Deposit Account and in all cash and instruments on deposit therein and in any interest thereon or proceeds therefrom and Borrower will execute any documents Lender deems reasonably necessary to document and perfect such security interest.

     (d) Interest earned on the funds in the Deposit Account or any investments thereof will remain in the Deposit Account.

     (e) Borrower will pay the fees and expenses of the administrator of the Deposit Account.

     (f) As used herein, the term “Trigger Event” shall mean either (i) the occurrence of an event of default under the Loan Documents, (ii) a decline in the Debt Service Coverage for the Property below 1.25x, or (iii) if both (A) Applicant fails to maintain a long term debt rating of at least BBB- by Standard & Poor’s Credit Ratings Services, a division of The McGraw Hill Companies, Inc. and Baa by Moody’s Investors Service, Inc. and (B) the Debt Service Coverage for the Property falls below 1.40x.

H-7-1

EX. H-8
MULTI. PROP.

EXHIBIT H — 8

ALLOCATED LOAN AMOUNTS

		Allocated
Property	Size (S. F.)	Loan Amount

Lender will allocate the Loan Amount among the properties comprising the Property based on the Appraisal obtained by Lender pursuant to this Agreement. Lender will notify Borrower of such allocations not less than 10 business days prior to Closing.

H-8-1

EX. H-9
RELEASE

EXHIBIT H — 9

RELEASE PROVISIONS — PARTIAL RELEASE

     During the Term, if Borrower proposes to sell a parcel (the “Release Parcel”) which is part of the Property to a bona fide third party purchaser, then Borrower will be permitted to obtain a release (a “Release”) of the Release Parcel subject to the following conditions and limitations:

I. CONDITIONS:

     (a) The Release is solely for the purpose of a transfer of the Release Parcel to an unaffiliated bona fide purchaser.

     (b) Not less than 90 days prior to the date of the Release, Borrower shall deliver to Lender (i) a notice setting forth (A) the date of the Release, (B) the name of the proposed transferee, and (C) any other information reasonably necessary for Lender to analyze the terms of the Release, and (ii) a non-refundable fee of $35,000 for such Release.

     (c) There shall be no event of default under the Loan Documents on either the notice date or the date of the Release.

     (d) Borrower shall pay all of Lender’s fees and expenses relating to the Release, including third party reports, title costs and outside counsel fees, if applicable.

     (e) Borrower shall deliver to Lender copies of the executed documents evidencing the transfer of the Release Parcel.

     (f) The loan to value ratio of the Property excluding the Release Parcel shall be less than the lesser of (i) 55% or (ii) the loan to value ratio of the Property including the Release Parcel immediately prior to the Release as determined by an appraisal satisfactory to Lender, paid for by Borrower and prepared by an appraiser appointed by Lender.

     (g) The Debt Service Coverage for the 12-month period following the Release based on projected Net Operating Income for the Property exclusive of the Release Parcel will be greater than the greater of (i) 1.58x or (ii) the Debt Service Coverage based on the Net Operating Income of the Property inclusive of the Release Parcel for the 12-month period prior to the Release.

     (h) Lender shall receive (i) 110% of the outstanding principal amount allocated to the Release Parcel (or if no allocation exists in the Loan Documents, an amount equal to 105% of the value of the Release Parcel as determined by an appraisal satisfactory to Lender and paid for by Borrower)(the “Release Amount”) to be applied to the outstanding principal balance of the Loan; (ii) accrued interest and all other sums due on the Loan allocated to the Release Parcel; and (iii) the Prepayment Premium (for purposes of determining such Prepayment Premium (A) the Prepayment Date Principal shall equal the principal amount being prepaid and (B) the Note

H-9-1

Payments shall be deemed to include each of (1) the scheduled debt service payments (determined as if the principal balance of the Loan was equal to the Release Amount) for the period from the date of the Release through the maturity date of the Loan and (2) the Release Amount); in connection with such payment, Lender will reset the monthly installments of principal and interest based upon the remaining term of the original amortization schedule.

     (i) Borrower shall satisfy such conditions as Lender may reasonably require to the Release, including providing any consents or approvals which may be necessary pursuant to Law or documents affecting the Release Parcel and confirming that the Property which remains encumbered by the mortgage/deed of trust complies with applicable Law and has direct access to streets and utilities, and Borrower shall deliver to Lender any other information, approvals and documents reasonably required by Lender relating to the Release.

     (j) Borrower and, if applicable, any Guarantor and Indemnitor, shall execute amendments to the Loan Documents to the extent necessary (as determined by and reasonably acceptable to Lender) and shall deliver to Lender such other documents, instruments, opinions and certificates as Lender shall deem necessary, in its reasonable discretion.

     (k) The Release shall not negatively affect the Property with regard to overall credit risk, tenant quality, geographic risk, lease expiration and similar matters, in each case as determined by Lender in its sole discretion. Lender will not release a property if (i) leases of more than 5% of the net rentable interior square footage of the Improvements (exclusive of the Release Parcel) would expire within 12 months following the date of Release or within 12 months before or after the maturity date of the Loan and (ii) leases of more than 5% of the net rentable interior square footage of the Improvements (exclusive of the Release Parcel) would expire during any 12-month period during the remainder of the then-existing Term.

II. DE MINIMIS RELEASE

     Notwithstanding the foregoing provisions of Section I of this Exhibit H-9 but subject to the limitations set forth in Section III of this Exhibit H-9, Borrower shall have the right to obtain a Release for any Release Parcel for any reason upon satisfaction of the following conditions (a “De Minimis Release”):

     (a) The principal amount of the Loan allocated to the Release Parcel at Closing shall not exceed $2,500,000 (and such allocation shall be based upon the balance of the loan amount at the time of such release),

     (b) Not less than 90 days prior to the date of the Release, Borrower shall deliver to Lender a notice setting forth (i) the date of the Release, (ii) the name of the proposed transferee, and (iii) any other information reasonably necessary for Lender to analyze the terms of the Release.

H-9-2

     (c) Lender shall receive (i) the Release Amount to be applied to the outstanding principal balance of the Loan, and (ii) accrued interest and all other sums due on the Loan allocated to the Release Parcel; in connection with such payment, Lender will reset the monthly installments of principal and interest based upon the remaining term of the original amortization schedule.

     (d) Borrower shall provide any consents or approvals which may be necessary pursuant to Law or documents affecting the Release Parcel and shall confirm that the Property which remains encumbered by the mortgage/deed of trust complies with applicable Law and has direct access to streets and utilities.

     (e) Borrower shall comply with the conditions set forth in paragraphs (b), (c), (d), (e) and (j) of Section I of this Exhibit H-9.

III. LIMITATIONS

     (a) No Release will be allowed during the first 12 months of the Term.

     (b) The aggregate number of Releases (exclusive of De Minimis Releases) allowed during the Term may not exceed three.

     (c) No Release (including a De Minimis Release) will be permitted which would cause the aggregate of the Release Amounts to exceed $30,000,000.

     (d) In any three month period, there shall be no more than one Release.

     (e) If a proposed Release does not comply with all of the applicable terms and conditions set forth above, or if an event of default exists under the Loan Documents, the Release will not be permitted.

H-9-3

EXHIBIT H — 10

SUBSTITUTION OF COLLATERAL

     During the Term, if Borrower proposes to sell a parcel (the “Substituted Parcel”) which is part of the Property to a bona fide third party purchaser, then as limited below, Borrower will be permitted to substitute (a “Substitution”) a property (the “Substitution New Parcel”) and obtain a release from Lender’s lien for the Substituted Parcel subject to the satisfaction of the following conditions and limitations, satisfaction to be determined by Lender in its reasonable discretion except as otherwise expressly stated:

I. CONDITIONS:

     (a) Lender shall receive not less than 90 days prior written notice of the Substitution, such notice to include (i) a full package of information concerning the Substitution New Parcel and (ii) the payment of a non-refundable fee of $60,000 for each Substitution.

     (b) Borrower shall pay, within 10 days of notice by Lender, a deposit for the costs of any appraisal, engineering or environmental reports required in connection with the Substitution in an amount reasonably determined by Lender.

     (c) There is no event of default under the Loan Documents on either the notice date or the date of the Substitution.

     (d) Borrower shall pay all of Lender’s fees and expenses relating to the Substitution, including third party reports, title costs and outside counsel fees, if applicable.

     (e) Prior to release of the Substituted Parcel, Lender shall receive evidence satisfactory to Lender that the Substituted Parcel is being sold to a bona fide third party purchaser.

     (f) Intentionally deleted;

     (g) The appraised value of the Substitution New Parcel shall be the greatest of the following values: (i) the actual appraised value of the Substituted Parcel or the appraised value allocated to the Substituted Parcel as part of a pool of properties, as selected by Lender in its sole and absolute discretion, in either case as determined at the time of Closing; (ii) the appraised value of the Substituted Parcel at the time of the Substitution (the appraised values described in (i) and (ii) to be determined by appraisals satisfactory to Lender, paid for by Borrower and prepared by an appraiser appointed by Lender); and (iii) the purchase price of the Substituted Parcel pursuant to an executed purchase and sale agreement with a bona fide third party purchaser.

     (h) The Debt Service Coverage for the Property for the 12-month period following the Substitution based on projected Net Operating Income for the Property exclusive of the Substituted Parcel but inclusive of the Substitution New Parcel shall not be less than the greater of (i) 1.58x or (ii) the Debt Service Coverage based on Net Operating Income for the Property

EX. H-10
SUBSTITUTION

inclusive of the Substituted Parcel for the 12-month period prior to the Substitution.

     (i) The Substitution New Parcel conforms in all respects to Lender’s underwriting standards and criteria as well as such other environmental, engineering, legal or title requirements, as Lender may determine in its sole discretion. In addition, the Substitution New Parcel will not negatively affect the Property with regard to overall credit risk, geographic risk, tenant quality, lease expiration and similar matters, as determined by Lender in its sole discretion. A Substitution will not be permitted if (A) leases of more than 5% of the net rentable square footage of the Improvements (exclusive of the Substituted Parcel but inclusive of the Substitution New Parcel) would expire within 12 months following the date of Substitution or within 12 months before or after the maturity date of the Loan or (ii) leases of more than 5% of the net rentable square footage of the Improvements (exclusive of the Substituted Parcel but inclusive of the Substitution New Parcel) would expire during any 12-month period during the remainder of the then-existing Term.

     (j) Borrower, and if applicable, Guarantor and Indemnitor, shall execute and deliver appropriate amendments to the Loan Documents satisfactory to Lender making the Substitution New Parcel part of the security for the Loan, Indemnitor shall execute an Environmental Indemnity with respect to the Substitution New Parcel and Lender shall receive such title assurances and endorsements to its existing policies confirming the priority of its lien on the Substitution New Parcel and extending the coverage of all insurance (including endorsements) offered under the existing policies to the Substitution New Parcel, consenting to the release of the Substituted Parcel, and otherwise confirming no adverse changes in title coverage or the amount thereof.

     (k) Borrower shall satisfy as to the Substitution in a timely fashion each of the Closing conditions set forth in this Agreement that would have been applicable if the Substitution New Parcel had been included in the original Property.

     (1) Borrower shall satisfy such conditions as Lender may reasonably require to the Substitution, including providing any consents or approvals which may be necessary pursuant to Law or documents affecting the Substituted Parcel and confirming that the Property which remains encumbered by the mortgage/deed of trust complies with applicable Law and has direct access to streets and utilities.

II. LIMITATIONS:

     (a) No Substitution will be allowed during the first 24 months of the Initial Term.

     (b) No more than three Substitutions will be allowed during the Term.

H-10-5

     (c) After giving effect to the proposed Substitution, the aggregate amount of the appraised value of the Substitution New Parcel and the appraised values of Substitution New Parcels in any prior Substitutions (measured as of the date of each such Substitution) shall not exceed $30,000,000.

     (d) In any three-month period, there shall be no more than one Substitution.

     (e) If a proposed Substitution does not comply with the terms and conditions set forth above, or if an event of default exists under the Loan Documents, the Substitution will not be permitted.

H-10-6

EX-10.16

EXHIBIT 10.16

* Portions of this exhibit have been omitted pursuant to a request for confidential treatment and have been filed separately with the Commission.

LOAN APPLICATION AND COMMITMENT AGREEMENT

July 20, 2009

Teachers Insurance and Annuity
   Association of America (the “Lender”)
730 Third Avenue
New York, NY 10017

Re: TIAA Authorization #AAA-6907
Investment ID. #0006733
Property Name: Nashville Portfolio
Property Addresses: (various);
Nashville, Tennessee

Ladies and Gentlemen:

     The undersigned Healthcare Realty Trust Incorporated (the “Applicant”), with an address at 3310 West End Avenue, Suite 700, Nashville, Tennessee 37203, applies for a loan (the “Loan”) upon the terms and subject to the provisions set forth in this Loan Application and Commitment Agreement (the “Agreement”), on behalf of a to-be-formed, special-purpose limited liability company (the “Borrower”):

1. LOAN TERMS:

(a)	Loan Amount: $31,250,000.
(b)	Interest Rate:

     (i) 7.25% per annum (the “Fixed Interest Rate”) for the Initial Term (defined herein); and

     (ii) 400 basis points (i.e., hundredths of 1% per annum) over the one-month LIBOR rate (the “Floating Interest Rate”), but with a floor rate of 7.25% for any Extension Term (defined herein).

     (c) Initial Term: 7 years from the first day of the first calendar month following Closing (defined herein).

     (d) Extension Terms: Borrower shall have the option to extend the Initial Term for two, one-year floating rate Extension Terms in accordance with the provisions contained in Exhibit H-1. For purposes of this Agreement, the “Term” shall mean the Initial Term as it may be extended for one or both of the Extension Terms.

     (e) Repayment Terms: Monthly installments of principal and fixed interest calculated on a 30-year amortization schedule. The Fixed Interest Rate shall be calculated on a 30-day month/360-day year, except that payments for the first and last months of the Term, if such payments pertain to partial months, shall be based upon the actual number of days in such months that the Loan is outstanding and a 365-day or 366-day year, as applicable. The entire outstanding principal balance plus all accrued interest and any

other sums due under the Loan Documents (defined herein) will be due and payable upon the expiration of the Term.

     (f) Optional Prepayment: Borrower, at Borrower’s option, may elect to prepay the Loan in whole, but not in part, on the first day of any calendar month, upon not less than 60 days’ prior written notice to Lender and in accordance with the provisions of Exhibit A; provided, however, that Borrower shall not be permitted to make such a prepayment election during the first 24 months of the Initial Term.

2. CLOSING, CLOSING DATE AND LOAN DISBURSEMENT:

     Upon Acceptance (defined herein), and Borrower’s compliance on or before the date that is 60 days after Acceptance (the “Closing Date”) with all of the provisions of this Agreement, Lender will disburse the Loan Amount at or from Lender’s offices in New York, New York (the “Closing”).

3. SECURITY FOR LOAN:

     The Loan will be secured by a first lien on Borrower’s interests in the land, the improvements (the “Improvements”) and the other real property interests described in Exhibit C, by a first security interest in the personal property and other intangibles described in Exhibit C, by a collateral assignment of the leases affecting, and the rents, issues, profits and revenues arising from, such property, and by the additional collateral, security and security interests, if any, described or referred to in Exhibit C (collectively, the “Property”).

4. LIMITATION OF LIABILITY:

     The Loan will be non-recourse to Borrower except for the carve-outs from non-recourse that are specified in Exhibit G. Borrower will deliver to Lender a Guaranty of Borrower’s recourse obligations under the Loan (the “Carve-Out Guaranty”) at Closing, executed by Applicant (in such capacity, the “Guarantor”).

5. ENVIRONMENTAL INDEMNITY:

     At Closing, Borrower will deliver to Lender an Environmental Indemnity (the “Environmental Indemnity”) executed by Applicant (in such capacity, the “Indemnitor”) in a form reasonably acceptable to Lender.

6. ACCUMULATIONS:

     At Closing and monthly thereafter, Borrower shall, pursuant to an agreement reasonably acceptable to Lender, deposit reserves for taxes and assessments against the Property with Lender or Lender’s designated agent in such amounts as Lender or its designated agent reasonably estimates to be necessary to permit Lender or its designated agent to pay such taxes and assessments as and when they are due during the Term. Any funds remaining in the account upon the expiration of the Term or permitted prepayment of the Loan will be returned to Borrower.

2

7. DEPOSITS, FEES AND EXPENSES:

     (a) Simultaneously with Applicant’s submission of this Agreement, Applicant is delivering to Lender the following fees:

     (i) 1% of the Loan Amount (the “Application Fee”);

     (ii) $75,400 (the “Consultant Fees”) to be used only after Acceptance (unless Applicant gives Lender written authorization for use prior to Acceptance) to pay for the Appraisal, the Environmental and Compliance Reports and the Engineering Reports (all defined in Exhibit G) together with the attendant inspections (collectively, the “Consultants’ Inspections and Reports”);

     (iii) an administrative fee of $100,000 (the “Administrative Fee”) for Lender’s time and services in preparing this Agreement and in preparing for Closing, which Administrative Fee is deemed earned and nonrefundable upon Applicant’s submission of this Agreement; and

     (iv) a retainer for Lender’s outside counsel legal fees (the “Lender Legal Fees”) incurred or payable in connection with the Loan in the amount of $20,000 (the “Legal Fee Retainer”).

     (b) The Application Fee, the Legal Fee Retainer, and the Letter of Credit (defined herein) or the Additional Cash Deposit (defined herein) are in consideration of Lender’s locking the Fixed Interest Rate and conducting due diligence and analysis of the Loan, all of which Applicant acknowledges to have significant commercial value. If Lender does not accept this Agreement, Lender will return (i) the Application Fee less any reasonable, out-of-pocket expenses (not otherwise stated herein) actually incurred by Lender to date, (ii) the Legal Fee Retainer less any reasonable Lender Legal Fees incurred or payable as of that date, and (iii) the Consultant Fees less any expenses for the Consultants’ Inspections and Reports incurred by Lender pursuant to Applicant’s specific written authorization. After Acceptance, Applicant agrees to pay upon demand, regardless of whether the Loan closes and as an obligation that survives Closing or the expiration or termination of this Agreement, any costs of the Consultants’ Inspections and Reports that exceed the Consultant Fees and any reasonable Lender Legal Fees that exceed the Legal Fee Retainer.

     (c) Within 10 days following Acceptance, Applicant will deliver to Lender either an irrevocable, unconditional letter of credit (the “Letter of Credit”) or, at Applicant’s election, a cash deposit (the “Additional Cash Deposit”) in an amount equal to 1% of the Loan Amount (the Letter of Credit or the Additional Cash Deposit and the Application Fee are referred to collectively as the “Loan Deposit”). The Letter of Credit must be in form reasonably acceptable to Lender, in the required amount in favor of “Teachers Insurance and Annuity Association of America”, irrevocable, expiring no less than 60 days after the Closing Date, issued and payable by a bank approved by Lender, and unconditionally available to Lender by Lender’s drafts, at sight. If the Letter of Credit is not issued and payable by a New York City bank, said Letter of Credit must give Lender the express right to present the original sight draft to the issuing bank by overnight delivery.

3

     (d) Lender is not obligated to pay any brokerage fee or commission or any other premium or charge in connection with this Agreement or with Closing that is based on any agreement or understanding of Applicant or Borrower with a broker, agent or finder. Borrower will indemnify, defend and hold harmless Lender against any claim for such fees, commissions, premiums or charges based on any such agreement or understanding with Applicant or Borrower, regardless of whether Lender accepts this Agreement or the Loan closes. This obligation on the part of Borrower survives Closing or the expiration or termination of this Agreement.

8. ACCEPTANCE PROCEDURE:

     Unless and until Acceptance occurs, this Agreement constitutes Applicant’s offer for Borrower to borrow the Loan Amount from Lender upon the terms and conditions set forth in this Agreement. In consideration of Lender’s engaging in initial due diligence and analysis with respect to the proposed Loan, Applicant agrees that such offer is irrevocable and exclusive for 15 days from the date Lender or its designated servicer or correspondent receives this Agreement executed by Applicant, together with the Consultant Fees, the Application Fee and the Legal Fee Retainer. All prior representations and understandings between Applicant and Lender with respect to Applicant’s offer to borrow are merged into this Agreement. Lender may accept or decline this offer in Lender’s sole discretion. This Agreement is not a binding commitment unless and until Lender accepts this Agreement as provided herein. Unless and until Acceptance occurs, Applicant is obligated only to maintain this Agreement as an irrevocable and exclusive offer for the time specified and to pay the fees, costs and expenses set forth in this Agreement and Lender is obligated only to return such fees as provided herein. If Lender approves Applicant’s application as described in this Agreement, Lender will execute and date this Agreement (the “Acceptance”). Upon Acceptance, this Agreement becomes a binding agreement, enforceable against Applicant and Lender, that obligates Borrower to accept and Lender to make the Loan upon and subject to the provisions contained in this Agreement, which alone sets forth the entire understanding between Applicant and Lender with respect to the Loan. As soon as practicable after Acceptance, Lender will deliver a copy of this Agreement to Applicant.

9. REPRESENTATIONS AND WARRANTIES BY BORROWER:

     Applicant agrees that the following representations and warranties will be correct at Closing, and Borrower will be deemed to repeat and reaffirm the same at Closing:

     (a) Borrower shall have the requisite power and authority under its organizational documents to execute and deliver the Loan Documents, to perform Borrower’s obligations under the Loan Documents and to consummate the transaction contemplated by this Agreement and shall have taken any necessary action to authorize the execution and delivery of the Loan Documents, the performance of Borrower’s obligations under the Loan Documents and the consummation of the transaction contemplated by this Agreement and shall be otherwise in compliance with all applicable Law (defined herein).

4

     (b) Borrower shall not be an “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”) that is subject to Title I of ERISA or a “plan” as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended, and the related Treasury Regulations (the “Code”) that is subject to Section 4975 of the Code, and the assets of Borrower shall not constitute “plan assets” of one or more such plans for purposes of Title I of ERISA or Section 4975 of the Code.

     (c) Borrower shall not be a “governmental plan” within the meaning of Section 3(32) of ERISA and transactions by or with Borrower shall not be subject to any laws regulating investments of and fiduciary obligations with respect to governmental plans.

     (d) None of Borrower, Guarantor or Indemnitor or any of their respective Affiliates (defined herein) (i) shall be during the Term in violation of any laws relating to terrorist acts, acts of war and money laundering (the “Anti-Terrorism Laws”), or (ii) shall be a “Prohibited Person” as defined under the Anti-Terrorism Laws or will be identified as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website http://www.treas.gov/ofac/tll_sdn.pdf or at any replacement website or official publication of such list (the “OFAC List”). For purposes of this Section 9(d), the term “Affiliate” is defined as any person that controls, is under common control with, or is controlled by the specified person, and the term “control” is defined as the power to direct or cause the direction of the management and policies of the applicable entity through ownership of voting securities or beneficial interests, by contract or otherwise, and persons having control include any general partner, managing member, manager or executive officer of the applicable entity, and any direct or indirect holder of more than 10% of the equity ownership interests of the applicable entity.

     (e) The Loan proceeds will not be used for any illegal purposes and no portion of the Property has been acquired with funds derived from illegal activities. No interest in Borrower shall have been acquired with funds derived from illegal activities.

     (f) Borrower shall covenant and agree to deliver to Lender any certification or other evidence requested from time to time by Lender in its sole discretion, confirming Borrower’s compliance with Anti-Terrorism Laws. The representations and warranties pertaining to Anti-Terrorism Laws and Borrower, Guarantor, Indemnitor or any of their respective Affiliates shall be deemed repeated and reaffirmed by Borrower as of the Closing and as of each date that Borrower makes a payment to Lender under the Loan Documents or receives any payment from Lender.

10. REPRESENTATIONS AND WARRANTIES OF APPLICANT:

     Applicant hereby represents and warrants as follows:

     (a) Applicant has the requisite power and authority under its organizational documents to execute and deliver this Agreement, to perform its obligations under this Agreement and to consummate the transaction

5

contemplated by this Agreement, and has taken any necessary action to authorize the execution and delivery of this Agreement, the performance of its obligations under this Agreement and the consummation of the transaction contemplated by this Agreement and is otherwise in material compliance with applicable Law.

     (b) Applicant is not an “employee benefit plan” as defined in Section 3(3) of ERISA that is subject to Title I of ERISA or a “plan” as defined in Section 4975(e) (1) of the Code which is subject to Section 4975 of the Code, and the assets of Applicant do not constitute “plan assets” of one or more such plans for purposes of Title I of ERISA or Section 4975 of the Code.

     (c) Applicant is not a “governmental plan” within the meaning of Section 3(32) of ERISA and transactions by or with Applicant are not subject to any laws regulating investments of and fiduciary obligations with respect to governmental plans.

     (d) Applicant is not in violation of any Anti-Terrorism Laws, is not a Prohibited Person as defined under the Anti-Terrorism Laws and is not identified as a “specially designated national and blocked person” on the OFAC List.

     (e) The Loan proceeds will not be used for any illegal purposes and no portion of the Property has been acquired with funds derived from illegal activities. To Applicant’s knowledge, no interest in Applicant has been acquired with funds derived from illegal activities.

     (f) Applicant covenants and agrees to deliver to Lender any certification or other evidence requested from time to time by Lender in its sole discretion to confirm Applicant’s compliance with Anti-Terrorism Laws.

11. NOTICES, CONSENTS AND APPROVALS:

     Any notice, demand, consent or approval provided for in this Agreement will be in writing and delivered in accordance with Exhibit F.

12. ADDITIONAL PROVISIONS:

     Additional Loan terms and Closing conditions, if any, applicable to the Loan are set forth in Exhibits G and H.

13. LENDER’S APPROVAL:

     After Acceptance, Lender’s approval of, consent to or satisfaction with any matter referred to in this Agreement will not be unreasonably withheld unless expressly provided otherwise.

14. ASSIGNMENT:

     Applicant will not assign this Agreement without Lender’s prior consent, which may be withheld in Lender’s sole discretion.

6

15. APPLICABLE LAW; JURISDICTION:

     This Agreement is delivered in the State of New York and is intended to be performed in New York and construed in accordance with the laws of New York, except to the extent otherwise set forth in the Loan Documents. All legal proceedings arising out of this Agreement will be litigated in the state or federal courts located in New York, New York and Applicant consents and submits to the jurisdiction of such courts, agrees to institute any litigation arising out of this Agreement in such courts, consents to service of process by mail and waives any right it may have to transfer or change the venue of any litigation brought against Applicant by Lender arising out of this Agreement.

16. AMENDMENTS:

     Before Acceptance, Applicant cannot amend this Agreement except in writing and with Lender’s prior consent, which may be withheld in Lender’s sole discretion. After Acceptance, except as expressly provided herein, this Agreement can only be amended by an Agreement signed by Applicant and Lender. After Acceptance, Lender reserves the right:

     (i) to waive, in whole or in part, any of the provisions benefiting Lender or to extend unilaterally any date or time period prescribed for the performance by Applicant hereunder to enable Applicant to so perform; and

     (ii) to extend unilaterally the Closing Date as Lender, acting in good faith and in a commercially reasonable manner, deems necessary; provided, however, that such extensions of the Closing Date shall not exceed 60 days in the aggregate.

17. RETURN OF LOAN DEPOSIT AND EXCESS CONSULTANT FEES AND EXCESS LEGAL FEE RETAINER UPON CLOSING:

     If the Closing occurs, then Lender shall return to Applicant at Closing the Loan Deposit, any unused Consultant Fees and any unused portion of the Legal Fee Retainer as follows:

     (a) If there are no post-closing requirements to be completed, Lender will refund the Loan Deposit to Applicant, less any sums due to or on behalf of Lender (the “Net Cash Deposit”) at Closing upon Lender’s receipt of Applicant’s original, executed wiring instructions. Lender will also (i) deduct any Lender Legal Fees from the Legal Fee Retainer and then refund any excess portion of Legal Fee Retainer to Applicant at Closing, and (ii) deduct the costs of any of the Consultants’ Inspections and Reports from the Consultant Fees and then refund any excess portion of the Consultant Fees to Applicant at Closing.

     (b) If there are any post-closing requirements to be completed, Lender will retain the portion of the Net Cash Deposit reasonably determined by Lender to be necessary as a reserve for costs (including any additional Lender Legal Fees) that Lender may incur in connection with Borrower’s satisfaction of such post-closing requirements. Upon Borrower’s satisfactory

7

completion of such post-closing requirements, Lender shall promptly refund to Borrower, upon receipt of Borrower’s wiring instructions, such retained portion of the Net Cash Deposit, less any sums due to or on behalf of Lender.

18. TERMINATION:

     (a) Subject to Section 18(b), if Applicant fails to deliver the Letter of Credit or Additional Cash Deposit, as applicable, within 10 days after Acceptance or if Closing does not occur on or before the Closing Date due to Applicant’s failure to comply with the terms of this Agreement, then Lender will have the right to retain, as Lender’s sole and exclusive remedy, the Loan Deposit, which Applicant agrees will be fully earned by Lender as liquidated damages (the “Liquidated Damages”) to compensate Lender in some measure for time spent, services performed, expenses incurred and losses that Lender may incur. Applicant acknowledges that it would be extremely difficult and impractical to ascertain the extent of Lender’s damages caused by failure of the Loan to close, and that the Liquidated Damages represent a reasonable estimate of Lender’s damages and are not a penalty. If any remedy described in this Agreement is denied, Lender may pursue any alternate remedy at law or in equity.

     (b) Notwithstanding the foregoing, if (i) Lender does not approve the Appraisal, (ii) Lender cannot comply with any Law, (iii) provided Applicant has complied with all other terms and conditions of this Agreement, Lender’s approval of the Engineering Report or the Environmental and Compliance Report is conditioned upon remediation of specified conditions, the cost of which exceeds the greater of 2% of the Loan Amount or $1,000,000 in the aggregate (as reasonably determined by Lender), and Applicant has determined not to proceed with the necessary remediation, or (iv) the Closing does not occur on or before the Closing Date for any other reason (including a termination of this Agreement pursuant to Section 20(f) hereof), other than Lender’s willful default or Applicant’s failure to comply with the terms of this Agreement as set forth in Section 18(a), then, in any such event, Lender shall give Applicant notice of same and, upon Applicant’s receipt of such notice, this Agreement shall terminate. Lender’s sole obligation under such circumstances will be to return the Loan Deposit to Applicant, together with (A) the excess of the Consultant Fees over the aggregate actual costs of the Consultants’ Inspections and Reports, and (B) the excess of the Legal Fee Retainer over the reasonable Lender Legal Fees incurred or payable to date, but less any sums due to or on behalf of Lender under this Agreement, including, if such termination is pursuant to clause (iii) above, a breakage fee in the amount of 1% of the Loan Amount.

19. NOMINEE:

     After Acceptance and upon notice to Applicant, Lender may designate a nominee to perform Lender’s obligations under this Agreement and Applicant will cause every item or document which is required under this Agreement to be delivered or assigned to Lender, to name and be delivered or assigned to Lender’s nominee, provided that such designation must occur not later than 10 days prior to Closing and no such designation by Lender shall release or relieve Lender from the performance of the duties and obligations of Lender hereunder.

8

20. MISCELLANEOUS:

     (a) Compliance with the provisions set forth in this Agreement by Applicant and Borrower is a prerequisite to Lender’s making the Loan.

     (b) Applicant and Borrower shall retain all risk of loss with respect to the Property.

     (c) After Acceptance, Lender reserves the right to inspect the Property periodically upon reasonable advance notice to Applicant.

     (d) Any agreement by or duty imposed on Applicant or Borrower in this Agreement to perform any obligation or to refrain from any act or omission constitutes a covenant on its part and includes a covenant by Applicant or Borrower, as the case may be, to cause its partners, members, principals, agents, representatives and employees to perform the obligation or to refrain from the act or omission in accordance with this Agreement. Any statement or disclosure contained in this Agreement about facts or circumstances relating to the Property, Borrower or the Loan constitutes a representation and warranty by Applicant made as of the date of Applicant’s execution of this Agreement.

     (e) Any document, instrument or other writing to be delivered to or to be satisfactory to Lender must be reasonably satisfactory to Lender in both form and content.

     (f) Lender shall not be obligated to close the Loan in the event that there is a “Material Adverse Change”, which shall mean a change that has a material adverse effect upon the use, value or condition of the Property or upon the business, properties, assets, condition (financial or otherwise) or results of operations of Borrower or Applicant. The parties hereto acknowledge that the financial, real estate, banking and/or capital markets are presently subject to a material disruption and that any further deterioration in (or adverse change affecting) any or all of such markets as determined by Lender in its discretion would be deemed to be a Material Adverse Change for all purposes hereunder.

     (g) That certain Confidentiality Letter dated May 7, 2009, between Applicant and TIAA-CREF Global Investments, LLC remains in effect and shall not be modified or affected by the terms of this Agreement. If the Loan does not close, the Confidentiality Letter shall thereafter remain in effect in accordance with its terms. If the Loan closes, the Loan Documents will contain all confidentiality obligations among Lender, Borrower, Guarantor and Indemnitor, and the terms and provisions of the Confidentiality Letter will be merged therein.

21. DEFINITIONS AND RULES OF CONSTRUCTION:

     (a) References in this Agreement to lettered exhibits are references to the Exhibits attached to this Agreement, all of which are incorporated in and constitute a part of this Agreement. References in this Agreement and

9

the Exhibits hereto to numbered sections are references to the sections of this Agreement.

     (b) The singular of any word includes the plural and the plural includes the singular. The use of any gender includes all genders.

     (c) No inference in favor of or against any entity with respect to any provision in this Agreement may be drawn from the fact that the entity drafted this Agreement.

     (d) “Certificate” means the sworn, notarized statement of the entity giving the certificate, made by a duly authorized person satisfactory to Lender affirming the truth and accuracy of every statement in the certificate. Any document that is “certified” means the document has been appended to a Certificate of the entity certifying the document which affirms the truth and accuracy of everything in the document being certified.

     (e) The phrase “free from bankruptcy” means free from bankruptcy or reorganization proceedings and from a general assignment for the benefit of creditors.

     (f) The terms “include,” “including” and similar terms are construed as if followed by the phrase “without limitation”.

     (g) The term “Law” means all present and future codes, constitutions, cases, opinions, rules, regulations, laws, orders, ordinances, requirements and statutes, as amended, of any government that affect or that may be interpreted to affect the Property, Borrower or the Loan.

     (h) The term “person” includes a natural person, firm, partnership, limited liability company, corporation and any other public or private legal entity.

     (i) The term “provisions” includes terms, covenants, conditions, agreements and requirements.

22. EXHIBITS:

     Attached to this Agreement are the Exhibits listed below.

Exhibit A — Prepayment Premium; Evasion of Prepayment Premium

Exhibit B — Permitted Future Leasing

Exhibit C — Description of Property

Exhibit D — Schedule of Leases and Leasing Requirements

Exhibit E — Special Purpose Entity Requirements/Borrower’s Composition

Exhibit E-l — Ownership Chart

Exhibit F — Notice

Exhibit G — Closing Conditions

Exhibits H-l — H-10 — Additional Provisions

10

23. COUNTERPARTS:

     This Agreement may be executed in any number of counterparts and all of the counterparts together will constitute a single original document.

24. APPLICANT’S AGREEMENT:

     This Agreement is executed by Applicant on the date first set forth above. Applicant agrees to be bound by all of the provisions hereof, and each person executing this Agreement on behalf of Applicant represents that (s)he has full authority to bind Applicant.

HEALTHCARE REALTY TRUST INCORPORATED, a Maryland corporation 3310 West End Avenue, Suite 700 Nashville, Tennessee 37203
By:	/s/ Stephen E. Cox, Jr
	Name:	Stephen E. Cox, Jr
	Title:	Vice President Applicant’s Taxpayer I.D. No: 62-1507028

25. CONFIRMATION OF FIXED INTEREST RATE:

     The Fixed Interest Rate for the Loan is 7.25% per annum.

[LENDER’S SIGNATURE TO APPEAR ON THE FOLLOWING PAGE]

11

26. LENDER’S ACCEPTANCE:

     This Agreement is accepted by Lender on this 28^th day of July, 2009, and is now a binding contract between Applicant and Lender.

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
By:	/s/ William A. Lane
	Name:	William A. Lane
	Title:	Director

12

EX. A
PREPAY

EXHIBIT A

PREPAYMENT PREMIUM; EVASION OF PREPAYMENT PREMIUM

Prepayment Premium:

     Any prepayment made pursuant to Section 1(f) will include a simultaneous payment of a prepayment premium equal to the amount which is the greater of (a) an amount equal to 1% (the “Prepayment Percentage”) times the amount of the principal of the Loan outstanding on the date of prepayment (the “Prepayment Date Principal”), or (b) the amount by which the sum of the Discounted Values (defined herein) of the Note Payments (defined herein), derived by using the Discount Rate (defined herein), exceeds the Prepayment Date Principal. In order to calculate the sum of the Discounted Values in the foregoing, each remaining Note Payment will be discounted and the resulting Discounted Values will be added together. The Loan may be prepaid without premium during the last 120 days of the Term.

Evasion of Prepayment Premium:

     If, at any time during the Term, the Loan is accelerated after an event of default or there is any prepayment not permitted by the Loan Documents, then any tender of payment of the amount necessary to satisfy the entire Loan, any judgment of foreclosure, any sum due at foreclosure and any tender of payment during any redemption period will include, to the extent permitted by Law, an amount (the “Evasion of Prepayment Premium”) which is the greater of (a) an amount equal to the Prepayment Percentage plus 300 basis points times the Prepayment Date Principal, or (b) the amount by which the sum of the Discounted Values of the Note Payments, derived by using the Default Discount Rate (defined herein), exceeds the Prepayment Date Principal. In order to calculate the sum of the Discounted Values in the foregoing, each remaining Note Payment will be discounted and the resulting Discounted Values will be added together.

Defined Terms:

     (a) “Discount Rate” means the annual yield on a U.S. Treasury issue selected by Lender (or such other commonly used benchmark as Lender selects in its reasonable discretion, if Lender determines that U.S. Treasury issues are not commonly used as benchmarks on the date of calculation), as reported by Bloomberg.com (or in any similar national financial newspaper, periodical or website designated by Lender if Bloomberg.com is not available), two weeks prior to prepayment, having a maturity date corresponding (or most closely corresponding, if not identical) to the last day of the then-existing Term, and, if applicable, a coupon rate corresponding (or most closely corresponding, if not identical) to the Fixed Interest Rate.

     (b) “Default Discount Rate” means the Discount Rate less 300 basis points.

A-1

      (c) “Discounted Value” means the Discounted Value of a Note Payment based on the following formula:

          NP        

     (1 + R/12)ⁿ = Discounted Value

NP	=	Amount of Note Payment.
R	=	Discount Rate or Default Discount Rate as the case may be.
n	=	The number of months between the date of prepayment and the scheduled date of the Note Payment in question rounded to the nearest integer.

     (d) “Note Payments” means (i) each of the scheduled payments of monthly debt service on the Loan for the period from the first day of the month subsequent to the date of prepayment through the end of the then-existing Term and (ii) the scheduled repayment of principal, if any, at the end of the Term.

A-2

EX. B
LEASING

EXHIBIT B

PERMITTED FUTURE LEASING

     The Loan Documents will permit Borrower to enter into leases without Lender’s prior consent, provided that there is no event of default under the Loan Documents then continuing, the terms of the lease are consistent with generally prevailing market terms in the geographic region in which the Property is located, and the lease either is written on a Lender-approved form of lease or is submitted with Lender’s standard form of subordination, non-disturbance and attornment agreement executed by the tenant thereunder.

     If the Debt Service Coverage (defined herein) for the Loan declines below 1.30x, Lender reserves the right to revoke, upon 60 days’ notice, Borrower’s privilege to enter into new leases without Lender’s consent.

     The Loan Documents will require Borrower to obtain Lender’s prior consent to (a) any new lease of 20,000 square feet or more of interior space within the Improvements, and/or (b) any new lease representing 10% or more of the gross revenues or of the net rentable area of the Property.

     Lender agrees to use best efforts to respond to requests for new lease approvals within 10 business days of notice thereof. No additional fee shall be due to Lender in connection with any request for Lender’s consent to a lease, provided that Borrower shall agree to reimburse Lender for reasonable legal fees incurred by Lender in responding to such request in an amount not to exceed $1,000 per request.

     Borrower will deliver to Lender an original or certified copy of each new lease, together with a reasonably detailed lease abstract, within 30 days after execution of the lease.

     The term “Debt Service Coverage” shall mean the Net Operating Income (defined herein) of the Property for the 12 months ending as of the end of the mostly recently ended fiscal quarter of Borrower divided by the amount of scheduled monthly debt service payments over such period. The term “Net Operating Income” shall mean the gross revenues derived from the Property after payment of annual insurance premiums, taxes and assessments and operating expenses of the Property (including ground rent if any). “Operating expenses of the Property” shall not include interest expense, income taxes, depreciation, amortization, capital costs (including tenant improvements), extraordinary expenses, and out-of-period revenue or expense adjustments.

B-1

EX. C
PROPERTY

EXHIBIT C

DESCRIPTION OF PROPERTY

Location: See attached Property Summary.

Land: See attached Property Summary.

Improvements: See attached Property Summary.

Title: Leasehold as to Land and Improvements by virtue of one or more ground leases. Additional provisions relating to the leasehold estate(s) are set forth in Exhibit H.

Personal Property: Borrower’s interest in any personal property located on the land or in the Improvements and essential to the operation and enjoyment of the Property including furniture, furnishings, equipment, appliances, accounts receivable, general intangibles, licenses, permits and the like.

Additional Collateral: Borrower’s interest in any operating agreements, reciprocal easement agreements, management agreements and other material agreements affecting the Property. In addition, Borrower’s interest in all reserve accounts required by this Agreement and any additional security, collateral or credit enhancements described in Exhibit H, if any.

C-1

NASHVILLE PORTFOLIO PROPERTY SUMMARY

Number

Ground

Year Built/

of

Square

Current

Lease

GL Renewal

Property

Address

City

State

Renovated

Ownership

Tenants

Footage

Occupancy

Expiration

Options

St Thomas Heart Institute

4230 Harding Road

Nashville

TN

2001

Ground Lease

6

77,105

*

4/23/2054

1 term of 25 years

St Thomas Medical Plaza East

4230 Harding Road

Nashville

TN

1989/2007

Ground Lease

32

247,228

*

4/23/2054

1 term of 25 years

St Thomas Medical Plaza West

4230 Harding Road

Nashville

TN

1976/2007

Ground Lease

28

67,085

*

4/23/2054

1 term of 25 years

Baptist Mid-State

2010 Church Street

Nashville

TN

1958/2005

Ground Lease

35

80,977

*

4/23/2054

1 term of 25 years

Baptist Medical Plaza I

2011 Church Street

Nashville

TN

1985/2005

Ground Lease

20

188,536

*

4/23/2054

1 term of 25 years

Baptist Medical Plaza II

2021 Church Street

Nashville

TN

1988/2005

Ground Lease

22

121,484

*

4/23/2054

1 term of 25 years

Total 6

712,415

86.7

%

C-2

EX. D
LEASES

EXHIBIT D

SCHEDULE OF LEASES AND LEASING REQUIREMENTS

     In addition to the other provisions in this Agreement, it is a condition to Closing that the leasing described below is in effect at Closing, with tenants satisfactory to Lender in physical occupancy that are paying rent and free from bankruptcy. Such leasing represents the minimum leasing required for Borrower to qualify for the Loan.

     In addition to the other provisions in this Agreement, the conditions to Closing include the following: (i) not less than 86.5% of the leasing on the attached rent roll shall be in effect at Closing with tenants in physical occupancy, paying rent and free from bankruptcy, and (ii) the Property shall have a minimum projected annual Net Operating Income of $4,000,000 and Debt Service Coverage as of the Closing of at least 1.50x.

     Applicant represents and warrants that, on the date on which Applicant has executed this Agreement, all existing leases of space within the Improvements are listed on the rent roll attached to this Agreement, which rent roll includes the square footage, commencement date, expiration date, current rent and future rent (if such future rent is subject to a set increase) for each tenant and a summary of each tenant’s operating expense reimbursement. Notwithstanding the foregoing, Applicant agrees that it shall, within 15 business days after Acceptance, provide to Lender a summary of any tenant purchase options, early lease termination options and lease renewal options.

D-1

RENT ROLL

Entity id	Building	Total		Leased		Occupancy
Stpb01	St Thomas Heart		77,105		*		*
Stpb02	St Thomas Plaza East		247,228		*		*
Stpb03	St Thomas Plaza West		67,085		*		*
Stpb04	Baptist Mid-State		80,977		*		*
Stpb05	Baptist Plaza I		118,536		*		*
Stpb06	Baptist Plaza II		121,484		*		*
Total			712,415		617,366		86.7	%

D-2

St. Thomas Heart Institute

Tenant Rent Roll

Update on Expired

Lease

Annual

Annual

Base Year/

Leases/Leases

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Expense Stop

Gross

Expiring before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

420

*

*

*

*

*

*

*

425

*

*

*

*

*

*

*

430

*

*

*

*

*

*

*

435

*

*

*

*

*

*

*

*

*

440

*

*

*

*

*

*

*

450

*

*

*

*

*

*

*

530

*

*

*

*

*

*

*

999

(2)

*

*

*

*

*

*

*

330A

*

*

*

*

*

*

*

330B

*

*

*

*

*

*

*

Total Sq Ft (1)

77,105

Occupied Sq Ft (1)

*

Occupancy % (1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed sqaure footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-3

St. Thomas Medical Plaza East

Tenant Rent Roll

Update on

Expired

Leases/

Base Year/

Leases

Lease

Annual

Annual

Expense

Expiring

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

100

*

*

*

*

*

*

*

*

*

*

101

*

*

*

*

*

*

*

*

*

*

102

*

*

*

*

*

*

*

*

*

*

103

*

*

*

*

*

*

*

*

*

*

300

*

*

*

*

*

*

*

*

*

*

301

*

*

*

*

*

*

*

*

*

*

521

*

*

*

*

*

*

*

*

*

*

525

*

*

*

*

*

*

*

*

*

*

527

*

*

*

*

*

*

*

*

*

*

529

*

*

*

*

*

*

*

*

*

*

601

*

*

*

*

*

*

*

*

*

*

603

*

*

*

*

*

*

*

*

*

*

605

*

*

*

*

*

*

*

*

*

*

D-4

Update on

Expired

Leases/

Base Year/

Leases

Lease

Annual

Annual

Expense

Expiring

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

Before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

609

*

*

*

*

*

*

*

*

*

611

*

*

*

*

*

*

*

*

*

707

*

*

*

*

*

*

*

*

*

801

*

*

*

*

*

*

*

*

*

803

*

*

*

*

*

*

*

*

805

*

*

*

*

*

*

*

*

*

807

*

*

*

*

*

*

*

*

810

*

*

*

*

*

*

*

*

811

*

*

*

*

*

*

*

*

900

*

*

*

*

*

*

*

*

*

901

*

*

*

*

*

*

*

*

999 (2)

*

*

*

*

*

*

*

*

1000

*

*

*

*

*

*

*

*

200A

*

*

*

*

*

*

*

*

200B

*

*

*

*

*

*

*

*

200C

*

*

*

*

*

*

*

*

D-5

Update on

Expired

Leases/

Base Year/

Leases

Lease

Annual

Annual

Expense

Expiring

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

230A

*

*

*

*

*

*

*

230B

*

*

*

*

*

*

*

*

301B

*

*

*

*

*

*

*

*

400A

*

*

*

*

*

*

*

*

400C

*

*

*

*

*

*

*

*

*

Total Sq Ft (1)

247,228

Occupied Sq Ft (1)

*

Occupancy %(1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed sqaure footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-6

St. Thomas Medical Plaza West

Tenant Rent Roll

Update on

Expired

Leases/

Base Year/

Leases

Lease

Annual

Annual

Expense

Expiring

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

101

*

*

*

*

*

*

*

*

*

103

*

*

*

*

*

*

*

*

*

104

*

*

*

*

*

*

*

*

105

*

*

*

*

*

*

*

*

201

*

*

*

*

*

*

*

*

*

202

*

*

*

*

*

*

*

*

*

203

*

*

*

*

*

*

*

*

*

205

*

*

*

*

*

*

*

*

207

*

*

*

*

*

*

*

*

208

*

*

*

*

*

*

*

*

210

*

*

*

*

*

*

*

*

*

212

*

*

*

*

*

*

*

*

*

214

*

*

*

*

*

*

*

*

216

*

*

*

*

*

*

*

*

D-7

Update on

Expired

Leases/

Base Year/

Leases

Lease

Annual

Annual

Expense

Expiring

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

302

*

*

*

*

*

*

*

*

303

*

*

*

*

*

*

*

*

307

*

*

*

*

*

*

*

*

400

*

*

*

*

*

*

*

*

501

*

*

*

*

*

*

*

*

*

503

*

*

*

*

*

*

*

*

*

507

*

*

*

*

*

*

*

*

999(2)

*

*

*

*

*

*

*

309A

*

*

*

*

*

*

*

*

G1

*

*

*

*

*

*

*

*

G10

*

*

*

*

*

*

*

*

*

D-8

Update on

Expired

Leases/

Base Year/

Leases

Lease

Annual

Annual

Expense

Expiring

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

GI2

*

*

*

*

*

*

*

*

G4

*

*

*

*

*

*

*

*

G6

*

*

*

*

*

*

*

*

G7A

*

*

*

*

*

*

*

Total Sq Ft (1)

67,085

Occupied Sq Ft (1)

*

Occupancy %(1)

*

(1)	the 999 suites are inlcuded in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed sqaure footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-9

Baptist Mid-State Medical Center

Tenant Rent Roll

Update on

Expired

Leases/

Base Year/

Leases

Lease

Annual

Annual

Expense

Expiring

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

100

*

*

*

*

*

*

*

*

101

*

*

*

*

*

*

*

*

103

*

*

*

*

*

*

*

*

200

*

*

*

*

*

*

*

*

201

*

*

*

*

*

*

*

*

202

*

*

*

*

*

*

*

*

203

*

*

*

*

*

*

*

*

204

*

*

*

*

*

*

*

*

205

*

*

*

*

*

*

*

*

207

*

*

*

*

*

*

*

*

303

*

*

*

*

*

*

*

*

305

*

*

*

*

*

*

*

*

D-10

Update on

Expired

Leases/

Base Year/

Leases

Lease

Annual

Annual

Expense

Expiring

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

307

*

*

*

*

*

*

*

310

*

*

*

*

*

*

*

*

312

*

*

*

*

*

*

*

*

314

*

*

*

*

*

*

*

*

320

*

*

*

*

*

*

*

323

*

*

*

*

*

*

*

326

*

*

*

*

*

*

*

*

409

*

*

*

*

*

*

*

410

*

*

*

*

*

*

*

420

*

*

*

*

*

*

*

*

424

*

*

*

*

*

*

*

*

503

*

*

*

*

*

*

*

*

*

506

*

*

*

*

*

*

*

*

*

508

*

*

*

*

*

*

*

513

*

*

*

*

*

*

*

514

*

*

*

*

*

*

*

*

D-11

Update on

Expired

Leases/

Base Year/

Leases

Lease

Annual

Annual

Expense

Expiring

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

520

*

*

*

*

*

*

*

*

521

*

*

*

*

*

*

*

*

526

*

*

*

*

*

*

*

*

*

603

*

*

*

*

*

*

*

*

*

608

*

*

*

*

*

*

*

*

*

615

*

*

*

*

*

*

*

624

*

*

*

*

*

*

*

626

*

*

*

*

*

*

*

*

701

*

*

*

*

*

*

*

705

*

*

*

*

*

*

*

*

*

710

*

*

*

*

*

*

*

712

*

*

*

*

*

*

*

720

*

*

*

*

*

*

*

723

*

*

*

*

*

*

*

728

*

*

*

*

*

*

*

*

D-12

Update on

Expired

Leases/

Base Year/

Leases

Lease

Annual

Annual

Expense

Expiring

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

730

*

*

*

*

*

*

*

*

732

*

*

*

*

*

*

*

*

734

*

*

*

*

*

*

*

*

736

*

*

*

*

*

*

*

*

*

738

*

*

*

*

*

*

*

999(2)

*

*

*

*

*

*

*

Total Sq Ft (1)

80,977

Occupied Sq Ft (1)

*

Occupancy % (1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed sqaure footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-13

Baptist Medical Plaza I

Tenant Rent Roll

											Update on
											Expired
											Leases/
									Base Year/		Leases
			Lease		Annual	Annual			Expense		Expiring
		Lease Start	Expiration	Leased	Base Rent	Other	Expense	Rent	Stop	Gross	before
Suite	Tenant	Date	Date	Sq. Ft.	PSF	Income	Reimbursement	Escalations	$ Amount	Up	10/31/09
100	*	*	*	*	*		*	*	*
103	*	*	*	*	*		*	*	*
101	*	*	*	*	*		*	*
202	*	*	*	*	*		*	*	*
205	*	*	*	*	*		*	*
301	*	*	*	*	*		*	*
302	*	*	*	*	*		*	*
307	*	*	*	*	*		*	*
311	*	*	*	*	*		*	*
313	*	*	*	*	*		*	*
315	*	*	*	*	*		*	*
401	*	*	*	*	*		*	*	*	*
403	*	*	*	*	*		*	*	*	*
405	*	*	*	*	*		*	*
501	*	*	*	*	*		*	*	*	*
503	*	*	*	*	*		*	*
505	*	*	*	*	*		*	*

D-14

											Update on
											Expired
											Leases/
									Base Year/		Leases
			Lease		Annual	Annual			Expense		Expiring
		Lease Start	Expiration	Leased	Base Rent	Other	Expense	Rent	Stop	Gross	before
Suite	Tenant	Date	Date	Sq. Ft.	PSF	Income	Reimbursement	Escalations	$ Amount	Up	10/31/09
601	*	*	*	*	*		*	*	*
603	*	*	*	*	*		*	*	*	*
605	*	*	*	*	*		*	*
701	*	*	*	*	*		*	*	*
703	*	*	*	*	*		*	*	*
801	*	*	*	*	*		*	*	*
805	*	*	*	*	*		*	*	*
999(2)	*	*	*	*	*		*	*
203A	*	*	*	*	*		*	*
203B	*	*	*	*	*		*	*
309B	*	*	*	*	*		*	*	*		*
LL1	*	*	*	*	*		*	*	*
LL2	*	*	*	*	*		*	*
LL4	*	*	*	*	*		*	*
LL5	*	*	*	*	*		*	*
LL7	*	*	*	*	*		*	*
LL8	*	*	*	*	*		*	*

D-15

Update on

Expired

Leases/

Base Year/

Leases

Lease

Annual

Annual

Expense

Expiring

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

UTI

*

*

*

*

*

*

Total Sq Ft (1)

118,536

Occupied Sq Ft (1)

*

Occupancy %(1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed sqaure footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-16

Baptist Medical Plaza II

Tenant Rent Roll

											Update on
											Expired
											Leases/
									Base Year/		Leases
			Lease		Annual	Annual			Expense		Expiring
		Lease Start	Expiration	Leased	Base Rent	Other	Expense	Rent	Stop	Gross	before
Suite	Tenant	Date	Date	Sq. Ft.	PSF	Income	Reimbursement	Escalations	$ Amount	Up	10/31/09
102	*	*	*	*	*		*	*	*
104	*	*	*	*	*		*	*	*
200	*	*	*	*	*		*	*	*
201	*	*	*	*	*		*	*	*
300	*	*	*	*	*		*	*	*
303	*	*	*	*	*		*	*	*
305	*	*	*	*	*		*	*	*		*
308	*	*	*	*	*		*	*
310	*	*	*	*	*		*	*
312	*	*	*	*	*		*	*	*
402	*	*	*	*	*		*	*	*	*
404	*	*	*	*	*		*	*

D-17

											Update on
											Expired
											Leases/
									Base Year/		Leases
			Lease		Annual	Annual			Expense		Expiring
		Lease Start	Expiration	Leased	Base Rent	Other	Expense	Rent	Stop	Gross	before
Suite	Tenant	Date	Date	Sq. Ft.	PSF	Income	Reimbursement	Escalations	$ Amount	Up	10/31/09
406	*	*	*	*	*		*	*	*	*
408	*	*	*	*	*		*	*	*	*
410	*	*	*	*	*		*	*
502	*	*	*	*	*		*	*
504	*	*	*	*	*		*	*	*	*
506	*	*	*	*	*		*	*	*
508	*	*	*	*	*		*	*
602	*	*	*	*	*		*	*
606	*	*	*	*	*		*	*	*		*
608	*	*	*	*	*		*	*	*	*	*
610	*	*	*	*	*		*	*	*
704	*	*	*	*	*		*	*	*	*	*
800	*	*	*	*	*		*	*	*
804	*	*	*	*	*		*	*
806	*	*	*	*	*		*	*
999(2)	*	*	*	*	*		*	*

D-18

Update on

Expired

Leases/

Base Year/

Leases

Lease

Annual

Annual

Expense

Expiring

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

ATM

*

*

*

*

*

*

*

LL3

*

*

*

*

*

*

*

*

UTI

*

*

*

*

*

*

*

Total Sq Ft (1)

121,484

Occupied Sq Ft (1)

*

Occupancy %(1)

*

(1)	the 999 suites are inlcuded in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed sqaure footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-19

EX. E
COMPOSITION

EXHIBIT E

SPECIAL PURPOSE ENTITY REQUIREMENTS/BORROWER’S COMPOSITION

     Applicant agrees that the following will be correct at Closing, and Borrower will recertify the following at Closing:

     (a) Borrower is and will continue to be a Single Purpose Entity and if Borrower is a general partnership, each of Borrower’s general partners is and will continue to be a corporation, limited partnership or limited liability company which is a Single Purpose Entity. “Single Purpose Entity” means an entity whose organizational documents set forth single purpose entity covenants satisfactory to Lender, in its sole discretion, including covenants that the entity:

     (i) is formed solely for the purpose of owning, managing and operating the Property and is not engaged and will not engage, either directly or indirectly, in any business other than the ownership, management and operation of the Property;

     (ii) does not have and will not acquire or use any assets other than the Property and personal property incidental to the business of owning, managing and operating the Property and activities incidental thereto; without limiting the foregoing, the Property shall be operated as a single property or project, generating substantially all of Borrower’s gross income, it being the intent that the Property shall constitute “single asset real estate” for purposes of Section 362(d)(3) of the Bankruptcy Code;

     (iii) will not liquidate or dissolve (or suffer any liquidation or dissolution), or enter into any transaction of merger or consolidation, or acquire by purchase or otherwise all or substantially all the business or assets of, or any stock or other evidence of beneficial ownership of, any entity;

     (iv) will not, nor will any partner, limited or general, member or shareholder thereof, as applicable, violate the terms of its partnership certificate, partnership agreement, articles of incorporation, bylaws, operating agreement, articles of organisation or other formation agreement or document, as applicable;

     (v) will observe, if it is a limited liability company, all limited liability company formalities that relate to the entity’s separateness pursuant to its formation documents, operating agreement, bylaws or partnership agreement (as the case may be), or any other organizational filing or document governing its affairs;

     (vi) has not and will not guarantee, pledge its assets for the benefit of, or otherwise become obligated for, the obligations of any other person or hold out its credit or assets as being available to

E-1

satisfy the obligations of any other person except for obligations for indemnification and other obligations of Borrower pursuant to its operating agreement, bylaws or partnership agreement, as applicable;

     (vii) has not incurred and will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (A) the Loan and (B) unsecured trade debt incurred in the ordinary course of business (not evidenced by a note) and paid in the ordinary course of business in connection with owning, operating and maintaining the Property, provided that such indebtedness is paid within 90 days of when incurred (unless the claim for such indebtedness is disputed in good faith and cash reserves are maintained therefor during the period of such dispute which would be sufficient to discharge fully such indebtedness);

     (viii) will be and will at all times hold itself out to the public as a legal entity separate and distinct from any other entity (including, without limitation, any affiliate (defined herein), general partner or member, as applicable, or any affiliate of any of its general partners or members, as applicable), will correct any known misunderstanding concerning its separate identity, and will not identify any other entity (including, without limitation, any affiliate, general partner or member, or any affiliate of any of its general partners or members, as applicable) as a division or part of it;

     (ix) subject to the management of the Property by a property manager using a single operating account and to the commingling of reserves and other funds held by Lender as required under the Loan Documents, will not commingle its funds or assets with those of any other person, and will maintain and account for its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any other person;

     (x) will maintain its own separate, complete and accurate accounts, books, records and financial statements complying with GAAP, provided that it may file or may be part of a consolidated federal tax return to the extent required or permitted by applicable Law so long as there is an appropriate notation indicating its separate existence and its assets and liabilities;

     (xii) will pay its obligations and expenses from its own funds and assets (to the extent that it has funds to do so);

     (xiii) will not have any paid manager or director for the entity (other than the Independent Manager (defined herein)) and, to the extent it has any employees, it will pay the salaries of its own employees from its own funds and in the absence of such paid employees, it will obtain all necessary services through third parties or independent contractors;

E-2

     (xiv) will conduct and operate business in its own name or in the name of the Property, will allocate fairly and reasonably any overhead for shared office space and use separate stationary, invoices and checks;

     (xv) will not enter into or be a party to any transaction with any of its general partners, principals, affiliates or members, as applicable, or any affiliate of any of its general partners, principals or members, except in the ordinary course of business and upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arms-length basis with a third party other than an affiliate;

     (xvi) will not make loans or advance credit to any person (including affiliates) other than to tenants of the Property in the form of tenant allowances or tenant improvements, provided that this covenant shall not preclude such entity from amending or modifying the financial terms of leases for the Property pursuant to lease amendments or modifications completed in accordance with the provisions of the Loan Documents;

     (xvii) will not take any action which, under the terms of its formation document or other applicable organizational documents, requires the unanimous consent of all directors, partners or members, as applicable, without such required vote;

     (xviii) will not engage in, seek or consent to any dissolution, winding up, liquidation, consolidation, merger, asset sale, bankruptcy or insolvency filing, or material amendment to or modification (including any amendments or modifications of its separateness covenants) of its partnership agreement, articles of incorporation, bylaws, operating agreement, articles of organization or other formation agreement or document, as applicable, without the required written consent of Lender;

     (xix) will continue to operate its business with the goal of maintaining capital which is adequate for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations, to the extent funds are available from the Property; and

     (xx) will not fail at any time to have at least one Independent Manager that will vote on material matters affecting it, which matters shall include (a) any proposed insolvency or bankruptcy proceeding of such entity, (b) incurring indebtedness outside the ordinary course of business, (c) any merger or consolidation of it with any other entity, (d) any dissolution or liquidation of such entity, and (e) any amendment or modification of any provision of its organizational documents relating to company purpose, title to or management of the

E-3

Property, its bankruptcy-remote status, and/or the admission or removal of general partners or members, as the case may be, provided that no termination or change of the Independent Manager shall be made without giving Lender at least 20 days’ prior written notice, which notice shall include a copy of any bio-profile or resume of such replacement Independent Manager.

Borrower shall agree to keep the Single Purpose Entity covenants set forth in this paragraph (a) and such covenants will be included in the Loan Documents and shall be, at the time of the Closing, included in Borrower’s organizational documents.

     As used herein, the term “Independent Manager” shall mean a duly appointed member of the board of directors or board of managers who is provided by a nationally-recognized company that provides professional independent directors/managers who shall not have been at the time of initial appointment or at any time while serving as an Independent Manager, and may not have been at any time during the preceding five years, (i) a stockholder, director, officer, employee, partner, attorney or counsel of Borrower or any affiliate of Borrower, (ii) a customer, supplier or other person who derives any of its purchases or revenues from its activities with such entity or any affiliate of Borrower, (iii) a person controlling or under common control with any such stockholder, partner, customer, supplier or other person, or (iv) a member of the immediate family of any such stockholder, director, officer, employee, partner, customer, supplier or other person. For purposes of this Exhibit E, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a person, whether through ownership of voting securities, by contract or otherwise, and the term “affiliate” means for the specified person: (1) any person directly or indirectly owning, controlling or holding with power to vote 10% or more of the outstanding voting securities or interests of such specified person; (2) any person 10% or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote by such specified person; (3) any person directly or indirectly controlling, controlled by or under common control with such specified person; (4) any officer, director or partner of such specified person; (5) if such specified person is an officer, director or partner, any entity for which such person or entity acts in any such capacity; and (6) any close relative or spouse of such specified person if an individual.

     If Borrower is a single-member limited liability company, then such limited liability company must be duly organized and in good standing under the laws of Delaware.

     (b) Borrower shall be duly organized and in good standing and qualified to do business in the state where the Property is located. Applicant will, prior to the Closing, transfer the Property to Borrower if Borrower is not currently the owner thereof.

E-4

     (c) Attached hereto as Exhibit E-1 is an Ownership Chart prepared by Applicant that shows Borrower’s proposed ownership structure, including the name, state of formation and type of entity of Borrower and each of Borrower’s constituents and their respective percentage interests in Borrower, and showing the complete form of signature block for Borrower, including the name and title of its authorized representative.

     (d) Applicant will deliver to Lender no later than 20 days before Closing, all applicable organizational documents of Borrower and its constituents and of Applicant, and will identify all owners of 10% or more of direct or indirect ownership interests in Borrower, the percentage interest of each such owner, and Borrower’s taxpayer identification number and address if different from Applicant’s as indicated in Section 24. After Lender’s approval, none of the foregoing may be amended without Lender’s consent.

     (e) The Ownership Chart and all organizational documents and information delivered or to be delivered to Lender are correct and complete, and Borrower shall be deemed to have recertified the same as of the Closing Date.

E-5

EX. E-1
OWNERSHIP CHART

EXHIBIT E-1

OWNERSHIP CHART

E-1-1

[NAME OF BORROWER], a Delaware limited liability company
By:
	Title:

Authorized Representatives:

David R. Emery—President and Chief Executive Officer
B. Douglas Whitman, II—Executive Vice President and Chief Operating Officer
Scott W. Holmes — Executive Vice President and Chief Financial Officer
John M. Bryant, Jr.—Executive Vice Present and General Counsel
Todd J. Meredith—Senior Vice President—Real Estate Investments
Brince R. Wilford—Senior Vice President—Real Estate Investments
Julie A. Wilson—Senior Vice President
Frederick M. Langreck—Senior Vice President, Treasurer and Assistant Secretary
James C. Douglas—Vice President—Asset Administration
Stephen E. Cox, Jr.—Vice President and Assistant General Counsel
Andrew E. Loope—Vice President and Corporate Counsel
Rita H. Todd—Secretary

E-1-2

EX. F
NOTICE

EXHIBIT F

NOTICE

All acceptances, approvals, consents, demands, notices, requests and other communications (the “Notices”) required or permitted to be given under this Agreement must be in writing and sent by certified mail, return receipt requested, or by nationally recognized overnight delivery service that provides evidence of the date of delivery, with all charges prepaid (for next business day delivery if sent by overnight delivery service), addressed to the appropriate party at its address listed below:

If to Applicant or Borrower:	Healthcare Realty Trust Incorporated 3310 West End Avenue, Suite 700 Nashville, Tennessee 37203 Attn: James C. Douglas
with courtesy copies to:	Healthcare Realty Trust Incorporated 3310 West End Avenue, Suite 700 Nashville, Tennessee 37203 Attn: General Counsel
	and
	Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C. 211 Commerce Street, Suite 1000 Nashville, Tennessee 37201 Attn: David J. White
If to Lender:	Teachers Insurance and Annuity Association 730 Third Avenue New York, New York 10017 Attn: Director, Global Private           Markets, Portfolio Management TIAA Authorization #AAA-69Q7 Investment ID. #0006733
with courtesy copies to:	Teachers Insurance and Annuity Association 730 Third Avenue New York, New York 10017 Attn: Associate General Counsel and           Director, Asset Management Law TIAA Authorization #AAA-6907 Investment ID. #0006733

F-1

and

Teachers Insurance and Annuity

Association
8500 Andrew Carnegie Boulevard
Mailstop: 8500N-C2-07
Charlotte, North Carolina 28262
Attn: Nicole Brovet Cantu

Lender and Applicant each may change the address to which Notices must be sent, by notice given in accordance with the provisions of this Exhibit F. All Notices given in accordance with the provisions of this Exhibit F will be deemed to have been received upon the date of receipt if sent by certified mail, or one business day after having been deposited with a nationally recognized overnight delivery service if sent by overnight delivery. Notwithstanding the foregoing, any Notice sent to the last designated address of any person to which it is required to be sent pursuant to this Agreement shall not be deemed ineffective if actual delivery cannot be made due to a change of address of the person to which the Notice is directed or the refusal of such person to accept delivery thereof.

F-2

EX. G
CLOSING CONDITIONS

EXHIBIT G

CLOSING CONDITIONS

     Lender’s obligation to make the Loan is subject to timely satisfaction of the conditions set forth below:

     1. Applicant shall have delivered (or caused Borrower or title company to deliver) to Lender the following items relating to the Property as soon as practicable after Acceptance and a reasonable period of time prior to Closing but in all cases in accordance with any time period specifically set forth below, all items to be reasonably satisfactory to Lender (and Applicant acknowledges that Acceptance does not constitute Lender’s approval of any items delivered to Lender prior to Acceptance):

     (a) originals or certified copies of all operating agreements and ground leases affecting the Property to which Applicant or any of its affiliates is a party (including, without limitation, any master ground lease or other ground lease affecting the Property), and copies of reciprocal easement agreements, management agreements, material agreements all non-residential leases, including leases described or referred to in Exhibit D, together with any short form leases, amendments, addenda, exhibits, lease guarantees or assignments relating thereto, and as soon as practicable after execution, copies of all non-residential leases or other material agreements affecting the Property executed after the initial delivery of leases and other material agreements hereunder. After Lender’s approval, none of the foregoing may be amended without Lender’s prior consent;

     (b) two copies of the standard proposed form lease for the Property, which may not be amended in any material respect after approval by Lender;

     (c) final plans and specifications for the Improvements described in Exhibit C for any portion of the Improvements that is in Seismic Zone 3 or 4;

     (d) a current title report or binder (including the fee underlying any leasehold estate), a search of appropriate UCC records, and, at Closing, an ALTA Loan Title Insurance Policy with such coinsurance, reinsurance and endorsements as Lender deems necessary issued by a title insurance company approved by Lender and excluding any creditors’ rights exceptions or exclusions;

     (e) a current ALTA as-built survey certified to Lender;

     (f) a pro forma certification of the rent roll verifying information about the leases affecting the Property (to be revised as necessary with new or amended information arising after the pro forma was prepared), certified by Borrower no more than 15 days and not less than 5 days before Closing, which rent roll shall include (i) the square footage, commencement date, expiration date, current rent and future rent (if such future rent is subject to a set increase), (ii) a summary of each tenant’s lease provision(s) for reimbursement of operating expenses, real estate taxes and insurance

G-1

premiums, and (iii) a summary of any tenant purchase options, early lease termination options and lease renewal options;

     (g) not less than 30 days before Closing, an original or certified copy of insurance policies and evidence of payment of the insurance premium for full replacement cost of the Improvements and Personal Property referred to in Exhibit C (without deduction for depreciation), which insurance will include fire and sprinkler leakage, extended coverage, vandalism, malicious mischief, boiler and machinery, terrorism coverage, windstorm, earthquake and flood insurance (if located in earthquake or flood zones), a minimum of 12 months of rent loss insurance, and such other kinds of insurance as may be required by Lender in its sole discretion, premiums prepaid, issued by companies and in amounts reasonably satisfactory to Lender, with a standard mortgagee endorsement in Lender’s favor for the property insurance, an additional insured endorsement in Lender’s favor for liability insurance and a waiver of subrogation endorsement, where applicable;

     (h) an original or certified copy of the unconditional certificate of occupancy or other unconditional certificate of appropriate governmental authorities evidencing compliance with all zoning, building and applicable regulations, and an original or certified copy of any other consents, permits, licenses, approvals and franchises referred to in paragraph 5 of this Exhibit G;

     (i) not more than 30 days and not less than 5 days before Closing, (1) original tenant estoppel certificates dated not more than 30 days before Closing from tenants St. Thomas Hospital and Baptist Hospital and any additional tenants such that the total square footage covered by all received estoppels equals or exceeds at least 75% of the total leased area of the Property, as shown on the attached rent roll, and (2) an original tenant estoppel certificate dated not more than 30 days before Closing for each non-residential lease affecting the Property under which the tenant thereunder leases not less than 20,000 square feet of interior space within the Improvements and an original subordination, non-disturbance and attornment agreement for each non-residential lease affecting the Property under which the tenant thereunder leases not less than 20,000 square feet of interior space within the Improvements and designated by Lender in its sole discretion;

     (j) a certified inventory of Personal Property included in the Property;

     (k) to the extent the Property is composed of one or more separate tax parcels, copies of receipted tax and assessment bills for the current tax year and for the previous tax year for such tax parcels;

     (1) a form of opinion prepared by counsel satisfactory to Lender covering such legal matters as Lender deems reasonably appropriate, including due authorization, due execution, enforceability, usury or choice of law, and due organization and good standing of Borrower, with the original to be signed, dated and delivered to Lender at Closing;

G-2

     (m) year-to-date operating statements for the Property for the fiscal year in which Closing occurs and operating statements for the Property for the prior fiscal year; capital and operating budgets for the Property for the remainder of the fiscal year in which Closing occurs and for the next succeeding fiscal year; and such other financial information covering operations of the Property and the financial condition of Borrower, Borrower’s constituent entities and Applicant as Lender may reasonably request;

     (n) standard UCC, bankruptcy, state and federal tax lien, and pending litigation/judgment searches for (i) Borrower, (ii) Applicant, and (iii) the Property Manager (if affiliated with Borrower or Applicant);

     (o) not less than 5 business days before Closing, ground lessor estoppel and agreements in form and substance reasonably acceptable to Lender from any fee owners of the Property; and

     (p) from time to time before Closing, such other documentation or information as Lender may reasonably request in connection with Closing.

     2. In the event that the terms of any operating agreements, ground leases, reciprocal easement agreements, management agreements and other material agreements affecting the Property entitle Borrower to request an estoppel certificate concerning the status or effectiveness of or compliance with the terms and conditions of any such instrument (individually, an “REA Estoppel Certificate”) and Lender so requests any such REA Estoppel Certificate prior to Closing, Borrower shall use its good faith efforts to obtain any such REA Estoppel Certificate prior to Closing in the form and from the parties prescribed by such instrument (or, in the event no such form is prescribed, in a form reasonably acceptable to Lender).

     3. The leasing requirements set forth in Exhibit D shall have been satisfied.

     4. Borrower shall have executed and delivered to Lender documents satisfactory to Lender (the “Loan Documents”) evidencing and securing the Loan and any other obligations of Borrower set forth in this Agreement, which will include provisions substantially in the form of the following:

     (a) late charges of 5% of any late payment; a default interest rate of 5% per annum over the Fixed Interest Rate; the Evasion of Prepayment Premium described in Exhibit A, payable upon repayment of the Loan after an event of default or upon any other prepayment not permitted by the Loan Documents; and provisions for payment of reasonable fees relating to actions of Lender requested by Borrower under the Loan Documents;

     (b) a 5-day grace period for monetary defaults; and a 30-day grace period after notice for non-monetary defaults which will be extended as necessary for non-monetary defaults not susceptible of cure within 30 days, if Borrower commences to cure within the 30-day period, diligently prosecutes

G-3

the cure to completion and the entire grace period for a non-monetary default does not exceed 120 days;

     (c) conditions to Borrower’s right to enter into leases affecting the Property without Lender’s consent, which conditions are more particularly described in Exhibit B;

     (d) requirements to deliver to Lender quarterly and annual financial statements for the Property (and for annual financial statements for Borrower and Guarantor/Indemnitor upon request) and such other financial information as Lender may reasonably request from time to time. The financial statements (which shall include partial fiscal years) shall be certified by Borrower and may be unaudited, except that following an event of default, the annual financial statements will be audited and accompanied by a satisfactory opinion from a CPA approved by Lender;

     (e) a requirement to deliver to Lender quarterly and annual certifications of the rent roll for the Property, certified by Borrower, verifying information about all leases affecting the Property and verifying Borrower’s compliance with the provisions of the Loan Documents relating to leasing;

     (f) subject to paragraphs 4(g) and 4(h) of this Exhibit G, prohibitions on prior or subordinate liens and encumbrances against the Property or any interest in the Property and on certain direct or indirect sales, assignments, pledges or other transfers of the Property or any estate or interest therein without Lender’s prior written consent which may be withheld in Lender’s sole and absolute discretion, it being understood that prohibited transfers include (A) direct or indirect changes (by operation of law or otherwise and including mergers) in the identity or composition of Borrower or a change in control (as defined in Exhibit E) of Borrower and (B) pledges of stock or of partnership or membership interests, as the case may be, in Borrower, provided that any change in control of Guarantor or Indemnitor shall not constitute a change in control of Borrower while the equity securities of Guarantor or Indemnitor are listed on a public securities exchange or the over-the-counter market;

     (g) a one-time sale of the Property will be permitted, subject to the following conditions: (i) Lender’s approval of the transferee, which must have a net worth of at least $400 million and must be an institutional investor or developer with a reputation and experience comparable to those of Applicant at Closing; (ii) transferee’s express assumption of Borrower’s obligations under the Loan Documents and with respect to the Property; (iii) Lender’s approval in its sole discretion of a substitute guarantor and substitute indemnitor, and delivery of substitute guaranty and indemnity instruments in substantially the forms provided to Lender at Closing; (iv) satisfaction of the conditions set forth in paragraph 4(h) of this Exhibit G; (v) Lender’s receipt of satisfactory evidence that, immediately prior to the transfer and at least 12 months subsequent to the transfer, the Property supports a loan to value ratio no greater than 55%, with value to be determined by the purchase price of the Property pursuant to an executed

G-4

purchase and sale agreement with a bona fide third party purchaser, and a Debt Service Coverage of not less than 1.50x; and (vi) payment of a transfer and assumption fee in the amount of 1% of the outstanding principal balance of the Loan;

     (h) the following conditions under which transfers of the membership interests in Borrower will be permitted, subject to there being no change in control (as defined in Exhibit E) of Borrower or the Property:

     (i) Lender shall have received prior notice;

     (ii) there shall then be no existing default under the Loan Documents and all of Borrower’s payment obligations to Lender shall have been satisfied through the date of transfer;

     (iii) Borrower shall have paid Lender’s costs (including legal fees and expenses) and a processing fee relating to the transfer;

     (iv) the transfer shall not cause an ERISA violation;

     (v) the property manager of the Property shall be satisfactory to Lender;

     (vi) the transferee (including substitute guarantor or indemnitor) shall be domiciled in the United States and/or is a citizen of the United States, shall not be a “specifically designated national and blocked person” on the OFAC List and otherwise shall not be in violation of any Anti-Terrorism Laws, shall not have had adversarial dealings with Lender or had a monetary default under any other investment with Lender, shall not have been found guilty of criminal charges, and shall be free from bankruptcy;

     (vii) prior to the transfer, Borrower shall have provided Lender with a Uniform Commercial Code search report satisfactory to Lender relating to the transferee; and

     (viii) prior to the transfer, Borrower shall have delivered to Lender a certification as to all of the foregoing matters executed by an entity satisfactory to Lender, together with such evidence to confirm the accuracy of such certification as Lender may reasonably request;

     (i) carve-outs from the non-recourse limitation on liability, which are set forth in Exhibit H-6;

     (j) such covenants, warranties, representations and agreements of Borrower, Lender, the administrator of the Deposit Account (defined herein)

G-5

and a depositary institution as are required to satisfy the lock-box requirements set forth in Exhibit H-7; and

     (k) a requirement that any termination fee paid to Borrower in excess of $250,000 in connection with any lease termination shall be paid to Lender and used to reimburse Borrower for tenant improvement costs and leasing commissions associated with the affected leased premises (provided certain conditions are met); provided, however that upon an event of default under the Loan Documents, any and all lease termination fees (regardless of the amount) shall be paid to Lender and used to reimburse Borrower for tenant improvement costs and leasing commissions associated with the affected leased premises.

     5. Borrower’s composition shall continue to be the same as set forth in Exhibit E, and the representations and warranties contained therein shall be true, correct and complete as of the Closing Date.

     6. Lender shall have received evidence satisfactory to Lender that (i) the Property shall be in material compliance with all applicable Law, including those relating to construction, land use, health, safety and environmental matters and (ii) all permits, licenses, approvals and franchises required for the construction, use, operation, occupancy and management of the Property have been obtained and are in good standing and Borrower has complied with any specific conditions or requirements applicable to the Property.

     7. Lender shall have received and approved the following Consultants’ Inspections and Reports relating to the Property:

(a) a current appraisal (the “Appraisal”) prepared by an appraiser (the “Appraiser”) engaged by Lender in accordance with Lender’s scope of work. The Appraisal must support a loan to value ratio not to exceed 55%;

(b) a report (the “Engineering Report”), prepared by an independent engineer (the “Engineering Consultant”) engaged by Lender, in accordance with Lender’s scope of work. Applicant agrees to provide the Engineering Consultant with a copy of any soils investigation report with respect to the Property in Applicant’s possession. The Engineering Report will be based on a physical inspection of the Improvements and review of the final plans and specifications of the Improvements (to the extent they are required to be provided hereunder); and

(c) Environmental assessment and compliance reports (the “Environmental and Compliance Report”) prepared by an independent expert (the “Environmental Consultant”) engaged by Lender in accordance with Lender’s scope of work.

Applicant will cooperate and use reasonable efforts to cause its tenants, its property manager and other third parties with an interest in or information

G-6

about the Property to cooperate with the consultants in their investigations. Lender agrees to provide Borrower with copies of the Consultants’ Inspections and Reports within 10 days after Closing. Neither Lender nor any of the consultants will have any liability or responsibility to Borrower with respect to the Consultants’ Inspections and Reports.

     8. Borrower and all of Borrower’s members shall be (i) free from bankruptcy and (ii) solvent, as determined by Lender in its sole discretion, both in that the value of their respective assets exceeds their respective liabilities and that it is likely that they will be able to pay their debts, including, where applicable, payments required by the Loan Documents, as they become due in the foreseeable future.

     9. Lender shall have approved all legal matters.

Notwithstanding the requirements of this Exhibit G for the delivery of information and other materials, Applicant and Borrower may satisfy their delivery obligations under this Exhibit G for all or part of the information and other materials to be delivered by providing Lender with the addresses of one or more Internet web sites at which such information and other materials may be accessed by Lender.

G-7

EX. H
ADDITIONAL PROVISIONS

EXHIBIT H

ADDITIONAL PROVISIONS

The attached Exhibit H-1 through H-10 constitute the additional provisions applicable to the Loan.

Index

1.	Extension Terms	H-l
2.	Correspondent Authority and Fee Arrangement	H-2
3.	Cross Collateralization	H-3
4.	Ground Lease Terms	H-4
5.	Insurance Proceeds and Condemnation Awards for Restoration — Conditions to Use	H-5
6.	Limitation of Liability	H-6
7.	Mortgage/Deed of Trust Provisions	H-6A
8.	Lock-Box Requirements	H-7
9.	Allocated Loan Amounts	H-8
10.	Release Provisions — Partial Release	H-9
11.	Substitution of Collateral	H-10

H-1

EX. H-l
LOAN EXTENSION PROVISIONS

EXHIBIT H — l

EXTENSION TERMS

     First Extension: At any time between the 78^th and 83^rd month of the Initial Term and provided (i) no event of default exists under the Loan, (ii) the Debt Service Coverage at the Property is at least 1.50x, (iii) the loan to value ratio is not greater than 55%, and (iv) Borrower pays an extension fee in the amount of .50% of the then-current outstanding principal amount of the Loan, Borrower will have the option to extend the Initial Term for an additional 12-month extension term (the “First Extension”), subject to the following: the First Extension will on a floating rate basis, priced at 400 basis points over the 1-month LIBOR rate with a minimum coupon of 7.25% and will be amortized on a 30-year schedule.

     Second Extension: At any time between the 10^th and 11^th month of the First Extension and provided (i) no event of default exists under the Loan, (ii) the Debt Service Coverage at the Property is at least 1.50x, (iii) the loan to value ratio is not greater than 55%, and (iv) Borrower pays an extension fee in the amount of .50% of the then-current outstanding principal amount of the Loan, Borrower will have the option to extend the then-existing Term for an additional 12-month extension term (the “Second Extension”) on the same terms and conditions as the First Extension.

     Prepayment during either the First Extension or the Second Extension will be subject to the provisions of Section 1(f) and Exhibit A.

     In the event the Term is extended for either the First Extension or the Second Extension, Lender will require Borrower to purchase an interest rate cap from a “AA” rated counterparty and in a form reasonably acceptable to Lender. The interest rate cap will be required at the first day of each extension and shall cover the ensuing 12 months of such extension. The interest rate cap shall be at a rate that will provide for a minimum 1.40x Debt Service Coverage at the Property and such interest rate cap shall be assigned to Lender. The LIBOR rate cap required shall be calculated by Lender based on the lower of actual Net Operating Income of the Property for the preceding 12-month period and budgeted Net Operating Income for the ensuing 12-month period.

H-1-1

EX. H-2
CORRESPONDENT

EXHIBIT H — 2

CORRESPONDENT AUTHORITY AND FEE ARRANGEMENT

     Lender has retained Holliday Fenoglio Fowler, L.P. (the “Correspondent”) to originate and obtain applications for mortgage loans for consideration by Lender. Correspondent has been retained solely as an independent contractor and will not be considered or construed under any circumstances to be an agent of Lender. Applicant understands and agrees that Correspondent has no authority to accept or execute this Agreement on behalf of Lender and that all representations, documents and understandings between Applicant and Correspondent with respect to Applicant’s offer for Borrower to borrow are merged into this Agreement. Separate and apart from this Agreement, Applicant and Correspondent have entered into an agreement that provides for Applicant to pay to Correspondent a brokerage fee or commission in connection with the Loan and, notwithstanding the merger provision contained in the preceding sentence, such agreement is not merged into this Agreement.

     Applicant further acknowledges and agrees that Lender may have a separate compensation arrangement with Correspondent pursuant to which payments may be made by Lender to Correspondent or other compensation earned by Correspondent based on various factors. Such factors may, among other things, include the volume of new loan originations done by Correspondent with Lender (which may include the Loan or other loans made by Lender to other borrowers), the amount of loans serviced by Correspondent for Lender (which may include servicing of the Loan as well as other loans made by Lender to other borrowers), the scope of services and duties performed as part of the servicing performed by Correspondent over the Term, or the existence of a sub-servicing arrangement in connection with the Loan. Such compensation paid by Lender to Correspondent will be in addition to any fees paid to Correspondent by Applicant or Borrower.

H-2-1

EX. H-3
CROSS COLLATERALIZATION

EXHIBIT H — 3

CROSS COLLATERALIZATION

     The Loan Documents will contain cross-collateralization, cross-prepayment and cross-default provisions satisfactory to Lender, subject to the terms of and limitations imposed by the ground leases described in Exhibit H-4. Lender may, at Lender’s option, determine that multiple notes, guarantees and/or mortgages are required to document the Loan, and Borrower will execute such notes, guarantees and mortgages. The Loan Documents will provide that if an event of default occurs under any one of the notes and/or guarantees or under any one of the mortgages securing the notes and/or guarantees or under any of the other Loan Documents, such event of default will also constitute an event of default under the other notes and/or guarantees and mortgages and Lender will be entitled to exercise its remedies under all of the notes and/or guarantees, mortgages and other Loan Documents, including to foreclose upon all of the properties comprising the Property.

H-3-1

EX. H-4
GROUND LEASE TERMS

EXHIBIT H — 4

GROUND LEASE TERMS

Ground Leases:

     Certain provisions of the ground leases that currently govern the terms of the leasehold interests comprising part of the Property are set forth in the schedule attached to this Exhibit H-4.

Ground Lessor Agreements with Lender:

     As a condition to Closing, Borrower will deliver to Lender a document in recordable form executed by each ground lessor and reasonably satisfactory to Lender which confirms, among other things, (a) that Lender shall have the right to receive copies of all notices of default sent under the ground lease and shall have the opportunity to cure said defaults (including an additional cure period in the event ground lessee fails to cure any default which gives rise to a right to terminate the ground lease), (b) that such ground lessor will enter into a new ground lease or leases with Lender if the ground lease with such ground lessor is terminated at any time during the term thereof for any reason, including rejection of such ground lease in a bankruptcy proceeding, and/or (c) that Lender shall have the right of prior review and approval of any amendment, cancellation or termination of the ground lease provided that such separate document shall not be required in the event the ground lease expressly extends and provides such rights to Lender.

H-4-1

GROUND LEASE SCHEDULE

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:  Ground Lease (the “Lease”) between Seton Corporation (the “Lessor”) and HRT of Tennessee, Inc. (the “Lessee”), dated April 23, 2004

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	Baptist Hospital (Mid-State Medical Center Office Building; consisting of Units 2 & 3, according to Master Deed for Baptist Hospital)
Expiration Date	April 22, 2054
Renewals	One twenty-five year Renewal Period
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	Lessee owns Improvements, subject to reversionary interest of Lessor.
Transfer of Leasehold Interest	•   All transfers of any interest in the Premises are subject to the Declaration of Restrictive Covenants dated April 23, 2004, recorded as Instrument No. 20040429-0048870 in the Register’s Office for Davidson County, Tennessee (the “Declaration”).
	•   Subject to the Declaration, Lessee may sublease or assign the Lease without Lessor’s consent.
	•   Lessee is released from all obligations under the Lease upon assignment by Lessee to a Qualified Purchaser.
	•   Lessee has the right to mortgage the Leasehold Estate without Lessor’s consent so long as:
	(1)   The loan is made by a Mortgage Lender;
	(2)   The aggregate amount of the indebtedness secured by the Leasehold Estate does not exceed 80% of the appraised fair market value of the Improvements as determined by an independent MAI appraiser reasonably satisfactory to Mortgage Lender and Lessor;
	(3)   For permanent loans, interest must be paid in regular monthly installments over the period of the loan at a 30

H-4-2

Lease Provision	Summary
	year (or less) amortization rate from the date on which the financing takes effect; and
	(4)   The proceeds of the loan of such secured indebtedness are used exclusively by Lessee for the purpose of acquiring the Improvements (including, without limitation, the acquisition of the Improvements and the Leasehold Estate by a subsequent Lessee), financing Approved Work, refinancing of the foregoing, or were advanced by the Mortgage Lender for the purpose of protecting its interest in the event of a default under the loan documents evidencing the secured loan.
Summary of Rights of Mortgagee	•   Mortgage Lender will receive a copy of any notices delivered to Lessee under the Lease.
	•   Mortgage Lender has the right to cure an Event of Default within the later to occur of (i) 45 days after Mortgage Lender’s receipt of the Default Notice and (ii) the expiration of Lessee’s cure period under the Lease (or such additional period of time as is reasonably necessary, so long as Mortgage Lender is proceeding to cure such default continuously and diligently and in a manner acceptable to Lessor).
	•   Lessor will not terminate the Lease based on an Event of Default by Lessee if Mortgage Lender:
	(1)   commences foreclosure proceedings on the Leasehold Estate within 180 days following Mortgage Lender’s receipt of notice of a Default Notice;
	(2)   completes such foreclosure with reasonable diligence; and
	(3)   upon Lessor’s written demand, pays all delinquent Rent and other sums then due and owing under the Lease.
	•   Alternatively, following an Event of Default, Lessor may elect to:
	(1)   assume the Loan Documents and make payments thereunder without the addition of any penalty, premium, yield maintenance fee, assumption fee or other cost or expense; or
	(2)   purchase the Mortgage Lender’s rights in the Loan Documents for the unpaid balance of the indebtedness but without late fees, charges for default, prepayment penalty or premium.
	•   If Lessee rejects the lease in bankruptcy, Mortgage Lender may require that Lessor enter into a new lease with Mortgage Lender.
	•   Sale of the Leasehold Estate in foreclosure proceedings is deemed to be a permitted assignment, and such purchaser at foreclosure will be recognized by Lessor (as long as such purchaser satisfies the requirements of the Declaration).
	•   If required by written agreement between Mortgage Lender and Lessee, a copy of which was provided to Lessor, no voluntary amendment, cancellation, termination, surrender or

H-4-3

Lease Provision	Summary
	modification of the Lease is binding on Mortgage Lender without Mortgage Lender’s written consent (as long as the Loan Documents so require, and so long as Lessor was previously provided with a copy of such document).
	•   No Mortgage Lender or purchaser at foreclosure is responsible for pre-existing liabilities unless and to the extent such obligations are continuing and have not been performed.
Attornment	If Lessor’s interest in the Leased Premises is transferred to a Lessor Mortgagee or any Foreclosure Purchaser, Lessee shall be bound to such Lessor Mortgagee or Foreclosure Purchaser under the terms of the Lease and Lessee shall attorn to such Lessor Mortgagee or Foreclosure Purchaser, as the Lessor under the Lease.

H-4-4

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:  Ground Lease (the “Lease”) between St. Thomas Hospital (the “Lessor”) and HRT of Tennessee, Inc. (the “Lessee”), dated April 23, 2004

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the trems of the entire Lease.

Lease Provision	Summary
Premises	St. Thomas Hospital (Plaza East, Plaza West, Heart Institute Medical Office Buildings and Plaza East Garage)
Expiration Date	April 22, 2054
Renewals	One twenty-five year Renewal Period
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	Lessee owns Improvements, subject to reversionary interest of Lessor.
Transfer of Leasehold Interest	•   All transfers of any interest in the Premises are subject to the Declaration of Restrictive Covenants dated April 23, 2004, recorded as Instrument No. 20040429-0048872 in the Register’s Office for Davidson County, Tennessee (the “Declaration”).
	•   Subject to the Declaration, Lessee may sublease or assign the Lease without Lessor’s consent.
	•   Lessee is released from all obligations under the Lease upon assignment by Lessee to a Qualified Purchaser.
	•   Lessee has the right to mortgage the Leasehold Estate without Lessor’s consent so long as:
	(1)  The loan is made by a Mortgage Lender;
	(2)  The aggregate amount of the indebtedness secured by the Leasehold Estate does not exceed 80% of the appraised fair market value of the Improvements as determined by an independent MAI appraiser reasonably satisfactory to Mortgage Lender and Lessor;
	(3)  For permanent loans, interest must be paid in regular monthly installments over the period of the loan at a 30 year (or less) amortization rate from the date on which the financing takes effect; and

H-4-5

Lease Provision	Summary
	(4)   The proceeds of the loan of such secured indebtedness are used exclusively by Lessee for the purpose of acquiring the Improvements (including, without limitation, the acquisition of the Improvements and the Leasehold Estate by a subsequent Lessee), financing Approved Work, refinancing of the foregoing, or were advanced by the Mortgage Lender for the purpose of protecting its interest in the event of a default under the loan documents evidencing the secured loan.
Summary of Rights of Mortgagee	•   Mortgage Lender will receive a copy of any notices delivered to Lessee under the Lease.
	•   Mortgage Lender has the right to cure an Event of Default within the later to occur of (i) 45 days after Mortgage Lender’s receipt of the Default Notice and (ii) the expiration of Lessee’s cure period under the Lease (or such additional period of time as is reasonably necessary, so long as Mortgage Lender is proceeding to cure such default continuously and diligently and in a manner acceptable to Lessor).
	•   Lessor will not terminate the Lease based on an Event of Default by Lessee if Mortgage Lender:
	(1)  commences foreclosure proceedings on the Leasehold Estate within 180 days following Mortgage Lender’s receipt of notice of a Default Notice;
	(2)  completes such foreclosure with reasonable diligence; and
	(3)  upon Lessor’s written demand, pays all delinquent Rent and other sums then due and owing under the Lease.
	•   Alternatively, following an Event of Default, Lessor may elect to:
	(1)  assume the Loan Documents and make payments thereunder without the addition of any penalty, premium, yield maintenance fee, assumption fee or other cost or expense; or
	(2)  purchase the Mortgage Lender’s rights in the Loan Documents for the unpaid balance of the indebtedness but without late fees, charges for default, prepayment penalty or premium.
	•   If Lessee rejects the lease in bankruptcy, Mortgage Lender may require that Lessor enter into a new lease with Mortgage Lender.
	•   Sale of the Leasehold Estate in foreclosure proceedings is deemed to be a permitted assignment, and such purchaser at foreclosure will be recognized by Lessor (as long as such purchaser satisfies the requirements of the Declaration).
	•   If required by written agreement between Mortgage Lender and Lessee, a copy of which was provided to Lessor, no voluntary amendment, cancellation, termination, surrender or modification of the Lease is binding on Mortgage Lender without Mortgage Lender’s written consent (as long as the Loan

H-4-6

Lease Provision	Summary
	Documents so require, and so long as Lessor was previously provided with a copy of such document).
	•   No Mortgage Lender or purchaser at foreclosure is responsible for pre-existing liabilities unless and to the extent such obligations are continuing and have not been performed.
Attornment	If Lessor’s interest in the Leased Premises is transferred to a Lessor Mortgagee or any Foreclosure Purchaser, Lessee shall be bound to such Lessor Mortgagee or Foreclosure Purchaser under the terms of the Lease and Lessee shall attorn to such Lessor Mortgagee or Foreclosure Purchaser, as the Lessor under the Lease.

H-4-7

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:  Ground Lease (the “Lease”) between Seton Corporation (the “Lessor”) and HRT of Tennessee, Inc. (the “Lessee”), dated April 23, 2004

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	Baptist Hospital (Plaza I and Plaza II Medical Office Buildings, Guy Bates Conference Center and parking garage and mechanical room adjacent to Plaza I and Plaza II Medical Office Buildings)
Expiration Date	April 22, 2054
Renewals	One twenty-five year Renewal Period
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	Lessee owns Improvements, subject to reversionary interest of Lessor.
Transfer of Leasehold Interest	•   All transfers of any interest in the Premises are subject to the Declaration of Restrictive Covenants dated April 23, 2004, recorded as Instrument No. 20040429-0048867 in the Register’s Office for Davidson County, Tennessee (the “Declaration”).
	•   Subject to the Declaration, Lessee may sublease or assign the Lease without Lessor’s consent.
	•   Lessee is released from all obligations under the Lease upon assignment by Lessee to a Qualified Purchaser.
	•   Lessee has the right to mortgage the Leasehold Estate without Lessor’s consent so long as:
	(1)   The loan is made by a Mortgage Lender;
	(2)   The aggregate amount of the indebtedness secured by the Leasehold Estate does not exceed 80% of the appraised fair market value of the Improvements as determined by an independent MAI appraiser reasonably satisfactory to Mortgage Lender and Lessor;
	(3)   For permanent loans, interest must be paid in regular monthly installments over the period of the loan at a 30 year (or less) amortization rate from the date on

H-4-8

Lease Provision	Summary
	which the financing takes effect; and
	(4)   The proceeds of the loan of such secured indebtedness are used exclusively by Lessee for the purpose of acquiring the Improvements (including, without limitation, the acquisition of the Improvements and the Leasehold Estate by a subsequent Lessee), financing Approved Work, refinancing of the foregoing, or were advanced by the Mortgage Lender for the purpose of protecting its interest in the event of a default under the loan documents evidencing the secured loan.
Summary of Rights of Mortgagee	•   Mortgage Lender will receive a copy of any notices delivered to Lessee under the Lease.
	•   Mortgage Lender has the right to cure an Event of Default within the later to occur of (i) 45 days after Mortgage Lender’s receipt of the Default Notice and (ii) the expiration of Lessee’s cure period under the Lease (or such additional period of time as is reasonably necessary, so long as Mortgage Lender is proceeding to cure such default continuously and diligently and in a manner acceptable to Lessor).
	•   Lessor will not terminate the Lease based on an Event of Default by Lessee if Mortgage Lender:
	(1)   commences foreclosure proceedings on the Leasehold Estate within 180 days following Mortgage Lender’s receipt of notice of a Default’ Notice;
	(2)   completes such foreclosure with reasonable diligence; and
	(3)   upon Lessor’s written demand, pays all delinquent Rent and other sums then due and owing under the Lease.
	•   Alternatively, following an Event of Default, Lessor may elect to:
	(1)   assume the Loan Documents and make payments thereunder without the addition of any penalty, premium, yield maintenance fee, assumption fee or other cost or expense; or
	(2)   purchase the Mortgage Lender’s rights in the Loan Documents for the unpaid balance of the indebtedness but without late fees, charges for default, prepayment penalty or premium.
	•   If Lessee rejects the lease in bankruptcy, Mortgage Lender may require that Lessor enter into a new lease with Mortgage Lender.
	•   Sale of the Leasehold Estate in foreclosure proceedings is deemed to be a permitted assignment, and such purchaser at foreclosure will be recognized by Lessor (as long as such purchaser satisfies the requirements of the Declaration).
	•   If required by written agreement between Mortgage Lender and Lessee, a copy of which was provided to Lessor, no voluntary amendment, cancellation, termination, surrender or

H-4-9

Lease Provision	Summary
	modification of the Lease is binding on Mortgage Lender without Mortgage Lender’s written consent (as long as the Loan Documents so require, and so long as Lessor was previously provided with a copy of such document).
	•   No Mortgage Lender or purchaser at foreclosure is responsible for pre-existing liabilities unless and to the extent such obligations are continuing and have not been performed.
Attornment	If Lessor’s interest in the Leased Premises is transferred to a Lessor Mortgagee or any Foreclosure Purchaser, Lessee shall be bound to such Lessor Mortgagee or Foreclosure Purchaser under the terms of the Lease and Lessee shall attorn to such Lessor Mortgagee or Foreclosure Purchaser, as the Lessor under the Lease.

H-4-10

EX. H-5
INS. /CONDEMNATION

EXHIBIT H — 5

INSURANCE PROCEEDS AND CONDEMNATION AWARDS FOR
RESTORATION — CONDITIONS TO USE

     The terms of the applicable ground leases shall govern the application of insurance proceeds and condemnation awards (the “Proceeds”) payable with the respect to the Property during the Term, provided that, to the extent permitted by the applicable ground leases, the Loan Documents will permit Lender to apply Proceeds against the Loan subject to the following provisions to be included in the Loan Documents:

     (a) Notwithstanding the foregoing, after a casualty or a condemnation (a “Destruction Event”), Lender will make the Proceeds (less any costs incurred by Lender in collecting the Proceeds) available for restoration in accordance with the conditions for disbursements set forth in the Loan Documents, provided that the following conditions are met:

     (i) Borrower or the transferee under a permitted transfer, if any, continues to be Borrower at the time of the Destruction Event and at all times thereafter until the Proceeds have been fully disbursed;

     (ii) no default under the Loan Documents exists at the time of the Destruction Event and no event of default has occurred during the 12 months prior to the Destruction Event;

     (iii) all leases in effect immediately prior to the Destruction Event continue in full force and effect notwithstanding the Destruction Event, except as otherwise approved by Lender;

     (iv) if the Destruction Event is a condemnation, Borrower delivers to Lender evidence satisfactory to Lender that the Improvements can be restored to an economically and architecturally viable unit;

     (v) Borrower delivers to Lender evidence satisfactory to Lender that the Proceeds are sufficient to complete such restoration or if the Proceeds are insufficient to complete such restoration, Borrower first deposits with Lender funds (the “Additional Funds”) that when added to the Proceeds will be sufficient to complete such restoration;

     (vi) if the Destruction Event is a casualty, Borrower delivers to Lender evidence satisfactory to Lender that the insurer under each affected insurance policy has not denied liability under such policy as to Borrower or the insured under such policy;

     (vii) Lender is satisfied that the proceeds of any rent loss insurance in effect together with other available gross revenues from the Property are sufficient to pay debt service payments after paying taxes and assessments, insurance premiums, reasonable and customary

H-5-1

operating expenses and capital expenditures until the restoration is complete;

     (viii) Lender is satisfied that the restoration will be completed on or before the date (the “Restoration Completion Date”) that is the earliest of: (A) 12 months prior to the expiration of the then-existing Term; (B) 12 months after the Destruction Event; (C) the earliest date required for completion of restoration under any lease affecting the Property; or (D) any date required by Law; and

     (ix) for the 12-month period immediately preceding the Destruction Event, the annual Debt Service Coverage was at least 1.15x and, at the time of the Destruction Event, is at least l.l5x, provided that, if the Net Operating Income does not provide such Debt Service Coverage, Borrower expressly authorizes and instructs Lender (at Lender’s sole discretion) to apply an amount from the Proceeds to reduction of the outstanding principal amount of the Loan in order to reduce the annual debt service payments sufficiently for such Debt Service Coverage to be achieved. The reduced debt service payments will be calculated using the Fixed Interest Rate and an amortization schedule that will achieve the same proportionate amortization of the reduced principal over the then-remaining Term as would have been achieved if the principal and the originally scheduled debt service payments had not been reduced. Borrower will execute any documentation that Lender deems reasonably necessary to evidence the reduced principal and debt service payments.

     (b) If the total Proceeds for any Destruction Event are $250,000 or less and Lender elects or is obligated by Law or under the Loan Documents to make the Proceeds available for restoration, Lender will disburse to Borrower the entire amount received by Lender, and Borrower will commence restoration promptly after the Destruction Event and complete restoration not later than the Restoration Completion Date.

     (c) If the Proceeds for any Destruction Event exceed $250,000 and Lender elects or is obligated by Law or under the Loan Documents to make the Proceeds available for restoration, Lender will disburse the Proceeds and any required additional funds (the “Restoration Funds”) upon Borrower’s request as restoration progresses, generally in accordance with normal construction lending practices for disbursing funds for construction costs, provided that the following conditions are met:

     (i) Borrower commences restoration promptly after the Destruction Event and completes restoration on or before the Restoration Completion Date;

     (ii) if Lender requests, Borrower delivers to Lender prior to commencing restoration, for Lender’s approval, plans and specifications and a detailed budget for the restoration;

H-5-2

     (iii) Borrower delivers to Lender satisfactory evidence of the costs of the restoration incurred prior to the date of the request and such other documents as Lender may request, including mechanics’ lien waivers and title insurance endorsements;

     (iv) Borrower pays all costs of restoration whether or not the Restoration Funds are sufficient and, if at any time during the restoration, Lender determines that the undisbursed balance of the Restoration Funds is insufficient to complete restoration, Borrower deposits with Lender, as part of the Restoration Funds, an amount equal to the deficiency within 30 days after receiving notice of the deficiency from Lender; and

     (v) there is no default under the Loan Documents at the time Borrower requests funds or at the time Lender disburses funds.

     (d) If an event of default under the Loan Documents occurs at any time after the Destruction Event, then Lender will have no further obligation to make any remaining Proceeds available for restoration and may apply any remaining Proceeds as a credit against any portion of the Loan selected by Lender in its sole discretion.

     (e) Lender may elect at any time prior to or during the course of restoration to retain, at Borrower’s expense, an independent engineer or other environmental consultant to review the plans and specifications, to inspect restoration as it progresses and to provide reports. If any matter included in a report by the engineer or consultant is unsatisfactory to Lender, Lender may suspend disbursement of the Restoration Funds until the unsatisfactory matters contained in the report are resolved to Lender’s satisfaction.

     (f) If Borrower fails to commence and complete restoration in accordance with the terms of the Loan Documents, then in addition to any other remedies available to Lender, Lender may elect to restore the Improvements on Borrower’s behalf and reimburse itself out of the Restoration Funds for costs and expenses incurred by Lender in restoring the Improvements or Lender may apply the Restoration Funds as a credit against any portion of the Loan selected by Lender in its sole discretion.

     (g) Lender may commingle the Restoration Funds with its general assets and will not be liable to pay any interest or other return on the Restoration Funds unless otherwise required by Law. Lender will not hold any Restoration Funds in trust. Lender may elect to deposit the Restoration Funds with a depository satisfactory to Lender under a disbursement and security agreement satisfactory to Lender.

     (h) Borrower will pay all of Lender’s expenses incurred in connection with a Destruction Event or restoration. If Borrower fails to do so, then in addition to any other remedies available to Lender, Lender may from time to time reimburse itself out of the Restoration Funds.

H-5-3

     (i) If any excess Proceeds remain after restoration, Lender may elect, in its sole discretion, either to apply the excess as a credit against any portion of the Loan as selected by Lender in its sole discretion or to deliver the excess to Borrower.

     (j) No Prepayment Premium or Evasion of Prepayment Premium shall be due in connection with any prepayment of the Loan from Proceeds.

H-5-4

EX. H-6
LIMIT. LIAB.

EXHIBIT H — 6

LIMITATION OF LIABILITY

     The Loan Documents will include the following provisions relating to the limitation of Borrower’s liability:

     (a) Notwithstanding any provision in the Loan Documents to the contrary, except as set forth in paragraphs (b) and (c) of this Exhibit H-6, if Lender seeks to enforce the collection of the Loan, Lender will foreclose its mortgage/deed of trust instead of instituting suit on the note or other instrument evidencing the Loan. If a lesser sum is realized from a foreclosure of the mortgage/deed of trust and the sale of the Property than the then-outstanding amount owed under the Loan, Lender will not institute any suit or proceeding against Borrower or Borrower’s general partners, if any, for or on account of the deficiency, except as set forth in paragraphs (b) and (c) of this Exhibit H-6.

     (b) The limitation of liability in paragraph (a) of this Exhibit H-6 will not affect or impair (i) the lien of the mortgage/deed of trust or Lender’s other rights and remedies under the Loan Documents, including Lender’s right as mortgagee or secured party to commence an action to foreclose any lien or security interest Lender has under the Loan Documents; (ii) the validity of the Loan Documents or the obligations evidenced thereby; (iii) Lender’s rights under any Loan Documents that are not expressly non-recourse; or (iv) Lender’s right to present and collect on any letter of credit or other credit enhancement document held by Lender in connection with the obligations evidenced by the Loan Documents.

     (c) The following are excluded and excepted from the limitation of liability in paragraph (a) of this Exhibit H-6 and Lender may recover personally against Guarantor and Borrower and its general partners, if any, for the following:

     (i) all losses suffered and liabilities and expenses incurred by Lender relating to any fraud, intentional misrepresentation or omission by Borrower or any of Borrower’s partners, members, officers, directors, shareholders or principals in connection with (A) the performance of any of the conditions to Lender making the Loan; (B) any inducements to Lender to make the Loan; (C) the execution and delivery of the Loan Documents; (D) any certificates, representations or warranties given in connection with the Loan; or (E) Borrower’s performance of the obligations evidenced by the Loan Documents;

     (ii) all rents derived from the Property after an event of default under the Loan Documents which event of default is a basis of a proceeding by Lender to enforce the collection of the Loan and all moneys that, on the date such event of default occurs, are on deposit in one or more accounts used by or on behalf of Borrower relating to the operation of the Property, except to the extent properly applied to payment of debt service payments, taxes and assessments, insurance

H-6-1

premiums and any reasonable and customary expenses incurred by Borrower in the operation, maintenance and leasing of the Property or delivered to Lender directly or pursuant to the Lock-Box Agreement;

     (iii) the cost of remediation of any Environmental Activity affecting the Property, any diminution in the value of the Property arising from any Environmental Activity affecting the Property and any other losses suffered and any other liabilities and expenses incurred by Lender arising from a default under the provisions of the mortgage/deed of trust substantially in the form of Exhibit H-6A, Part I (and as mutually agreed to by Lender and Borrower);

     (iv) all security deposits collected by Borrower or any of Borrower’s predecessors and not refunded to tenants in accordance with their respective leases, applied in accordance with the leases or Law or delivered to Lender, and all tenant letters of credit and advance rents collected by Borrower or any of Borrower’s predecessors and not applied in accordance with the leases or delivered to Lender directly or pursuant to the Lock-Box Agreement;

     (v) any fee paid upon the termination of a lease affecting the Property received by Borrower which is not paid to Lender (or an escrow agent selected by Lender) to the extent required under the terms and conditions of the Loan Documents;

     (vi) the replacement cost of any fixtures and personal property owned by Borrower and removed from the Property by Borrower after an event of default occurs;

     (vii) all losses suffered and liabilities and expenses incurred by Lender relating to any acts or omissions by Borrower that result in waste (including economic and non-physical waste) on the Property;

     (viii) all protective advances and other payments made by Lender pursuant to express provisions of the Loan Documents after the occurrence and during the continuance of a default thereunder to protect Lender’s security interest in the Property or to protect the assignment of the property effected by the Loan Documents;

     (ix) all mechanics’ or similar liens relating to work performed on or materials delivered to the Property prior to Lender’s exercising its remedies under the Loan Documents but only to the extent Lender had advanced funds to pay for the work or materials;

     (x) all Proceeds that are not applied in accordance with the Loan Documents;

     (xi) all losses suffered and liabilities and expenses incurred by Lender relating to the forfeiture or threatened forfeiture of the Property to a governmental authority;

H-6-2

     (xii) all losses suffered and liabilities and expenses incurred by Lender relating to any default by Borrower under any of the provisions of the mortgage/deed of trust relating to ERISA;

     (xiii) all losses suffered and liabilities and expenses incurred by Lender relating to any default under any of the provisions of the mortgage/deed of trust relating to anti-terrorism or money laundering;

     (xiv) all losses suffered and liabilities and expenses incurred by Lender relating to any default by Borrower under the provisions of the mortgage/deed of trust requiring Borrower to provide prior notice to Lender of any change in Borrower’s legal name, place of business or state of organization;

     (xv) all losses suffered and liabilities and expenses incurred by Lender relating to the failure to maintain, or to pay the premiums for, any insurance required to be maintained under the Loan Documents; and

     (xvi) all losses suffered and liabilities and reasonable expenses incurred by Lender in connection with any default by Borrower beyond any applicable grace and cure period under any ground leases affecting the Property (including any master ground leases, as applicable) under which Borrower is the tenant or any violation of any covenant contained in the mortgage/deed of trust substantially in the form set forth in Exhibit H-6A, Part II (and as mutually agreed to by Lender and Borrower) or in connection with a termination of any ground lease affecting the Property (but with respect to any default caused by the failure to pay rent under any such ground lease, only to the extent that there exists or existed sufficient funds from the operation of the Property for the payment thereof).

Notwithstanding the foregoing, the limitation of liability set forth in paragraph (a) of this Exhibit H-6 SHALL BECOME NULL AND VOID and shall be of no further force and effect and Lender may recover personally against Borrower and its general partners, if any, in the event of (i) a voluntary bankruptcy or insolvency proceeding of Borrower filed without the prior consent of Lender if such proceeding is not dismissed in accordance with the terms of the mortgage/deed of trust, (ii) an involuntary bankruptcy or insolvency proceeding of Borrower, in which Borrower, any of its principals, officers, general partners or members, or Guarantor colludes with creditors in such bankruptcy or insolvency proceeding if such proceeding is not dismissed in accordance with the terms of the mortgage/deed of trust, (iii) an event of default occurs under any of the covenants or requirements contained in the mortgage/deed of trust relating to maintenance and operation of Borrower as a Special Purpose Entity, or (iv) a transfer of the Property that is not permitted under the mortgage/deed of trust, including the prohibition on any transfer that results in a violation of ERISA, money-laundering laws or the Anti-Terrorism Laws.

H-6-3

     (d) Nothing under paragraph (a) of this Exhibit H-6 will be deemed to be a waiver of any right which Lender may have under Sections 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code or under any other Law relating to bankruptcy or insolvency to file a claim for the full amount of the Loan or to require that all collateral will continue to secure all of the obligations evidenced by the Loan Documents in accordance therewith.

H-6-4

EX. H-6A
LIMIT. LIAB.

EXHIBIT H — 6A

MORTGAGE/DEED OF TRUST PROVISIONS

Part I:

Environmental Representations.

     Except as disclosed in the Environmental Report and to Borrower’s knowledge as of the date of this Deed of Trust:

     (i) no Environmental Activity has occurred or is occurring on the Property other than the use, storage, and disposal of Hazardous Materials which (A) are in the ordinary course of business consistent with the Permitted Use; (B) are in compliance with all Environmental Laws and (C) have not resulted in Material Environmental Contamination of the Property; and

     (ii) no Environmental Activity has occurred or is occurring on any property in the vicinity of the Property which has resulted in Material Environmental Contamination of the Property.

Environmental Covenants.

(a)	Borrower will not cause or knowingly permit any Material Environmental Contamination of the Property.
(b)	Borrower will not cause or knowingly permit any Environmental Activity to occur on the Property other than the use, storage and disposal of Hazardous Materials which (A) are in the ordinary course of business consistent with the Permitted Use; (B) are in compliance with all Environmental Laws; and (C) do not create a risk of Material Environmental Contamination of the Property.
(c)	Borrower will notify Lender immediately upon Borrower becoming aware of (i) any Material Environmental Contamination of the Property or (ii) any Environmental Activity with respect to the Property that is not in accordance with the preceding subsection (b). Borrower promptly will deliver to Lender copies of all documents delivered to or received by Borrower regarding the matters set forth in this subsection, including notices of Proceedings or investigations concerning any Material Environmental Contamination of the Property or Environmental Activity or concerning Borrower’s status as a potentially responsible party (as defined in the Environmental Laws). Borrower’s notification of Lender in accordance with the provisions of this subsection will not be deemed to excuse any default under the Loan Documents resulting from the violation of Environmental Laws or the Material Environmental Contamination of the Property or Environmental Activity that is the subject of the notice. If Borrower receives

H-6-5

	notice of a suspected violation of Environmental Laws in the vicinity of the Property that poses a risk of Material Environmental Contamination of the Property, Borrower will give Lender notice and copies of any documents received relating to such suspected violation.
(d)	From time to time at Lender’s request, Borrower will deliver to Lender any information known and documents available to Borrower relating to the environmental condition of the Property.
(e)	Lender may perform or engage an independent consultant to perform an assessment of the environmental condition of the Property and of Borrower’s compliance with this Section on an annual basis, or at any other time for reasonable cause, or after an Event of Default. In connection with the assessment: (i) Lender or consultant may enter and inspect the Property and perform tests of the air, soil, ground water and building materials; (ii) Borrower will cooperate and use best efforts to cause tenants and other occupants of the Property to cooperate with Lender or consultant, subject to the terms of such tenants’ respective leases and applicable law; (iii) Borrower will receive a copy of any final report prepared after the assessment, to be delivered to Borrower not more than 10 days after Borrower requests a copy and executes Lender’s standard confidentiality and waiver of liability letter; (iv) Borrower will accept custody of and arrange for lawful disposal of any Hazardous Materials required to be disposed of as a result of the tests; (v) Lender will not have liability to Borrower with respect to the results of the assessment; and (vi) Lender will not be responsible for any damage to the Property resulting from the tests described in this subsection and Borrower will look solely to the consultant to reimburse Borrower for any such damage. The consultant’s assessment and reports will be at Borrower’s expense (i) if the reports disclose any material adverse change in the environmental condition of the Property from that disclosed in the Environmental Report; (ii) if Lender engaged the consultant when Lender had reasonable cause to believe Borrower was not in compliance with the terms of this Section and, after written notice from Lender, Borrower failed to provide promptly reasonable evidence that Borrower is in compliance; or (iii) if Lender engaged the consultant after the occurrence of an Event of Default.

If Lender has reasonable cause to believe that there is Environmental Activity at the Property, Lender may elect in its sole discretion to release from the lien of this Deed of Trust any portion of the Property affected by the Environmental Activity and Borrower will accept the release.

H-6-6

Part II:

Ground Lease Provisions.

(a)	The Ground Lease is in full force and effect has not been amended and represents the entire agreement between Borrower and Ground Lessor and there are no defaults, events of default or events which with the passage of time or the giving of notice, would constitute a default or event of default under the Ground Lease.
(b)	Borrower will pay the Ground Rent as and when required under the Ground Lease and will perform all of Borrower’s obligations as ground lessee under the Ground Lease as and when required under the Ground Lease.
(c)	Borrower will cause Ground Lessor to pay and perform all of Ground Lessor’s obligations under the Ground Lease as and when required under the Ground Lease, will not give any approval required or permitted under the Ground Lease without Lender’s prior approval and will not exercise any options under the Ground Lease without Lender’s prior approval.
(d)	Borrower will not amend or waive any provisions of the Ground Lease; cancel or surrender the Ground Lease; or release or discharge Ground Lessor from any of the terms or obligations of the Ground Lease, without in each instance Lender’s prior approval which may be withheld in its sole discretion.
(e)	Borrower promptly will deliver to Lender copies of any notices of default or of termination that Borrower receives or delivers relating to the Ground Lease.
(f)	Without limiting Lender’s independent rights and remedies under Section 365(h) of the Bankruptcy Code:

(i)	Borrower will not elect to treat the Ground Lease as terminated under Subsection 365(h) (1) of the Bankruptcy Code without Lender’s prior consent to be exercised in its sole discretion, any such election made without Lender’s prior consent is null and void;
(ii)	Without in any manner limiting the provisions of subparagraph (i) of this Section, the lien of this Deed of Trust will attach to all of

H-6-7

	Borrower’s rights and remedies at any time arising under or pursuant to Subsection 365(h) of the Bankruptcy Code, including all of Borrower’s rights to remain in possession of the Property and Lender may assert, or direct Borrower to assert, any of such rights and remedies.
(iii)	If, pursuant to Subsection 365(h) of the Bankruptcy Code, Borrower seeks to offset against Ground Rent the amount of any damages caused by Ground Lessor’s failure to perform any of its obligations under the Ground Lease after the Ground Lessor rejects the Ground Lease under the Bankruptcy Code, Borrower will, prior to effecting such offset, notify Lender of its intent to do so, setting forth the amount proposed to be so offset and the basis therefor. Lender will have the right to object to all or any part of such offset and, in the event of such objection, Borrower will not effect any offset of the amount so objected to by Lender. Neither Lender’s failure to object as aforesaid nor any objection or other communication between Lender and Borrower relating to such offset will constitute an approval of any such offset by Lender. Borrower will indemnify, defend and save Lender harmless from and against any and all claims, demands, actions, suits, proceedings, damages, losses, costs and expenses of every nature whatsoever (including attorneys’ fees) arising from or relating to any offset by Borrower against the rent reserved in the Ground Lease.
(iv)	Borrower unconditionally assigns, transfers and sets over to Lender all of Borrower’s claims and rights to the payment of damages arising from any rejection by Ground Lessor of the Ground Lease under the Bankruptcy Code. Lender will have the right to proceed in its own name or in the name of Borrower in respect of any claim, suit, action or proceeding relating to the rejection of the Ground Lease, including the right to file and prosecute, to the exclusion of Borrower, any proofs of claim, complaints, motions, application, notice and other documents, in any case in respect of Ground Lessor under the Bankruptcy Code. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing

H-6-8

	claims, rights and remedies, and will continue in effect until all of the indebtedness and obligations secured by this Deed of Trust will have been satisfied and discharged in full. Any amounts received by Lender as damages arising out of the rejection of the Ground Lease as aforesaid will be applied first to all costs and expenses of Lender (including attorneys’ fees) incurred in connection with the exercise of any of its rights or remedies under this subsection (iv) and then in accordance with subsection (iii) of this Section.
(v)	In any Proceeding under the Bankruptcy Code relating to the Ground Lease or the Property, Borrower will appear in the Proceeding and will protect Lender’s interests in the Property and under the Loan Documents with attorneys and other professionals retained by Borrower and approved by Lender. Lender may elect, in Lender’s sole discretion, to engage its own attorneys and other professionals at Borrower’s expense to appear in the Proceeding and to protect Lender’s interests in the Property and under the Loan Documents. Borrower will not commence any Proceeding, file any application or make any motion relating to the Ground Lease in any Proceeding in its sole discretion under the Bankruptcy Code without Lender’s prior consent.
(vi)	Borrower will give Lender prompt notice of any filing by or against Ground Lessor or Borrower of a Proceeding under the Bankruptcy Code. The notice will set forth any information available to Borrower about the proceeding, including the date of the filing, the court in which the Proceeding was filed, and the relief sought. Borrower also will deliver to Lender, promptly following Borrower’s receipt thereof, any notices, summonses, pleadings, applications and other documents received by Borrower in connection with the Proceeding.
(vii)	If a Proceeding under the Bankruptcy Code is commenced by or against Borrower and Borrower, as lessee under the Ground Lease, rejects the Ground Lease pursuant to Section 365(a) of the Bankruptcy Code without giving Lender not less than 10 Business Days’ prior notice of the date on which Borrower will apply to the bankruptcy court for authority to reject the Ground Lease.

H-6-9

Lender may, in its sole discretion, give Borrower notice within such 10-Business Day period stating that (a) Lender demands that Borrower assume the Ground Lease and assign it to Lender pursuant to Section 365 of the Bankruptcy Code and (b) Lender will cure or provide adequate assurance of prompt cure of all defaults and will provide adequate assurance of future performance under the Ground Lease. In that event, Borrower will not seek to reject the Ground Lease and will comply with the demand provided for in (a) above within 30 days after Lender’s notice was given provided Lender performs its obligations under (b) above.

Effective upon the entry of an order for relief in respect of Borrower under Chapter 7 of the Bankruptcy Code, Borrower hereby assigns and transfers to Lender a non-exclusive right to apply to the bankruptcy court under Subsection 365(d)(1) of the Bankruptcy Code for an order extending the period during which the Ground Lease may be rejected or assumed.

H-6-10

EX. H-7
LOCK-BOX

EXHIBIT H — 7

LOCK-BOX REQUIREMENTS

     At Closing, Borrower will execute an agreement (the “Lock-Box Agreement”) satisfactory to Lender providing for the establishment of an account and sub-accounts (collectively, the “Deposit Account”) . The Lock-Box Agreement will include the following provisions:

     (a) On the date of Closing, all revenues from the Property will thereafter be deposited directly into the Deposit Account and disbursed in accordance with the Lock-Box Agreement. The Lock-Box Agreement shall provide that upon a Trigger Event (defined herein), including Borrower’s failure to pay the Loan on or prior to the maturity date of the Loan, Lender will give the administrator of the Deposit Account notice and all funds shall be applied to Lender’s payment “waterfall” prior to any funds being disbursed to Borrower, provided that, while any event of default under the Loan Documents is continuing, Lender will retain the right to declare the Loan immediately due and payable and to exercise all other remedies under the Loan Documents.

     (b) The Deposit Account will be maintained in Lender’s name at a depository institution satisfactory to Lender.

     (c) Lender will have a first priority perfected security interest in the Deposit Account and in all cash and instruments on deposit therein and in any interest thereon or proceeds therefrom and Borrower will execute any documents Lender deems reasonably necessary to document and perfect such security interest.

     (d) Interest earned on the funds in the Deposit Account or any investments thereof will remain in the Deposit Account.

     (e) Borrower will pay the fees and expenses of the administrator of the Deposit Account.

     (f) As used herein, the term “Trigger Event” shall mean either (i) the occurrence of an event of default under the Loan Documents, (ii) a decline in the Debt Service Coverage for the Property below 1.25x, or (iii) if both (A) Applicant fails to maintain a long term debt rating of at least BBB- by Standard & Poor’s Credit Ratings Services, a division of The McGraw Hill Companies, Inc. and Baa by Moody’s Investors Service, Inc. and (B) the Debt Service Coverage for the Property falls below 1.40x.

H-7-1

EX. H-8
MULTI. PROP.

EXHIBIT H — 8

ALLOCATED LOAN AMOUNTS

		Allocated
Property	Size (S.F.)	Loan Amount

Lender will allocate the Loan Amount among the properties comprising the Property based on the Appraisal obtained by Lender pursuant to this Agreement. Lender will notify Borrower of such allocations not less than 10 business days prior to Closing.

H-8-1

EX. H-9
RELEASE

EXHIBIT H — 9

RELEASE PROVISIONS — PARTIAL RELEASE

     During the Term, if Borrower proposes to sell a parcel (the “Release Parcel”) which is part of the Property to a bona fide third party purchaser, then Borrower will be permitted to obtain a release (a “Release”) of the Release Parcel subject to the following conditions and limitations:

I. CONDITIONS;

     (a) The Release is solely for the purpose of a transfer of the Release Parcel to an unaffiliated bona fide purchaser.

     (b) Not less than 90 days prior to the date of the Release, Borrower shall deliver to Lender (i) a notice setting forth (A) the date of the Release, (B) the name of the proposed transferee, and (C) any other information reasonably necessary for Lender to analyze the terms of the Release, and (ii) a non-refundable fee of $35,000 for such Release.

     (c) There shall be no event of default under the Loan Documents on either the notice date or the date of the Release.

     (d) Borrower shall pay all of Lender’s fees and expenses relating to the Release, including third party reports, title costs and outside counsel fees, if applicable.

     (e) Borrower shall deliver to Lender copies of the executed documents evidencing the transfer of the Release Parcel.

     (f) The loan to value ratio of the Property excluding the Release Parcel shall be less than the lesser of (i) 55% or (ii) the loan to value ratio of the Property including the Release Parcel immediately prior to the Release as determined by an appraisal satisfactory to Lender, paid for by Borrower and prepared by an appraiser appointed by Lender.

     (g) The Debt Service Coverage for the 12-month period following the Release based on projected Net Operating Income for the Property exclusive of the Release Parcel will be greater than the greater of (i) 1.50x or (ii) the Debt Service Coverage based on the Net Operating Income of the Property inclusive of the Release Parcel for the 12-month period prior to the Release.

     (h) Lender shall receive (1) 110% of the outstanding principal amount allocated to the Release Parcel (or if no allocation exists in the Loan Documents, an amount equal to 105% of the value of the Release Parcel as determined by an appraisal satisfactory to Lender and paid for by Borrower) (the “Release Amount”) to be applied to the outstanding principal balance of the Loan; (ii) accrued interest and all other sums due on the Loan allocated to the Release Parcel; and (iii) the Prepayment Premium (for purposes of determining such Prepayment Premium (A) the Prepayment Date Principal shall equal the principal amount being prepaid and (B) the Note

H-9-1

Payments shall be deemed to include each of (1) the scheduled debt service payments (determined as if the principal balance of the Loan was equal to the Release Amount) for the period from the date of the Release through the maturity date of the Loan and (2) the Release Amount); in connection with such payment, Lender will reset the monthly installments of principal and interest based upon the remaining term of the original amortization schedule.

     (i) Borrower shall satisfy such conditions as Lender may reasonably require to the Release, including providing any consents or approvals which may be necessary pursuant to Law or documents affecting the Release Parcel and confirming that the Property which remains encumbered by the mortgage/deed of trust complies with applicable Law and has direct access to streets and utilities, and Borrower shall deliver to Lender any other information, approvals and documents reasonably required by Lender relating to the Release.

     (j) Borrower and, if applicable, any Guarantor and Indemnitor, shall execute amendments to the Loan Documents to the extent necessary (as determined by and reasonably acceptable to Lender) and shall deliver to Lender such other documents, instruments, opinions and certificates as Lender shall deem necessary, in its reasonable discretion.

     (k) The Release shall not negatively affect the Property with regard to overall credit risk, tenant quality, geographic risk, lease expiration and similar matters, in each case as determined by Lender in its sole discretion. Lender will not release a property if (i) leases of more than 5% of the net rentable interior square footage of the Improvements (exclusive of the Release Parcel) would expire within 12 months following the date of Release or within 12 months before or after the maturity date of the Loan and (ii) leases of more than 5% of the net rentable interior square footage of the Improvements (exclusive of the Release Parcel) would expire during any 12-month period during the remainder of the then-existing Term.

II. LIMITATIONS

     (a) No Release will be allowed during the first 12 months of the Term.

     (b) The aggregate number of Releases allowed during the Term may not exceed three.

     (c) No Release will be permitted which would cause the aggregate of the Release Amounts to exceed $10,000,000.

     (d) In any three month period, there shall be no more than one Release.

     (e) If a proposed Release does not comply with all of the applicable terms and conditions set forth above, or if an event of default exists under the Loan Documents, the Release will not be permitted.

H-9-2

EXHIBIT H — 10

SUBSTITUTION OF COLLATERAL

     During the Term, if Borrower proposes to sell a parcel (the “Substituted Parcel”) which is part of the Property to a bona fide third party purchaser, then as limited below, Borrower will be permitted to substitute (a “Substitution”) a property (the “Substitution New Parcel”) and obtain a release from Lender’s lien for the Substituted Parcel subject to the satisfaction of the following conditions and limitations, satisfaction to be determined by Lender in its reasonable discretion except as otherwise expressly stated:

I. CONDITIONS:

     (a) Lender shall receive not less than 90 days prior written notice of the Substitution, such notice to include (i) a full package of information concerning the Substitution New Parcel and (ii) the payment of a non-refundable fee of $60,000 for each Substitution.

     (b) Borrower shall pay, within 10 days of notice by Lender, a deposit for the costs of any appraisal, engineering or environmental reports required in connection with the Substitution in an amount reasonably determined by Lender.

     (c) There is no event of default under the Loan Documents on either the notice date or the date of the Substitution.

     (d) Borrower shall pay all of Lender’s fees and expenses relating to the Substitution, including third party reports, title costs and outside counsel fees, if applicable.

     (e) Prior to release of the Substituted Parcel, Lender shall receive evidence satisfactory to Lender that the Substituted Parcel is being sold to a bona fide third party purchaser.

     (f) Intentionally deleted;

     (g) The appraised value of the Substitution New Parcel shall be the greatest of the following values: (i) the actual appraised value of the Substituted Parcel or the appraised value allocated to the Substituted Parcel as part of a pool of properties, as selected by Lender in its sole and absolute discretion, in either case as determined at the time of Closing; (ii) the appraised value of the Substituted Parcel at the time of the Substitution (the appraised values described in (i) and (ii) to be determined by appraisals satisfactory to Lender, paid for by Borrower and prepared by an appraiser appointed by Lender); and (iii) the purchase price of the Substituted Parcel pursuant to an executed purchase and sale agreement with a bona fide third party purchaser.

     (h) The Debt Service Coverage for the Property for the 12-month period following the Substitution based on projected Net Operating Income for the Property exclusive of the Substituted Parcel but inclusive of the Substitution New Parcel shall not be less than the greater of (i) 1.50x or

EX. H-10
SUBSTITUTION

(ii) the Debt Service Coverage based on Net Operating Income for the Property inclusive of the Substituted Parcel for the 12-month period prior to the Substitution.

     (i) The Substitution New Parcel conforms in all respects to Lender’s underwriting standards and criteria as well as such other environmental, engineering, legal or title requirements, as Lender may determine in its sole discretion. In addition, the Substitution New Parcel will not negatively affect the Property with regard to overall credit risk, geographic risk, tenant quality, lease expiration and similar matters, as determined by Lender in its sole discretion. A Substitution will not be permitted if (A) leases of more than 5% of the net rentable square footage of the Improvements (exclusive of the Substituted Parcel but inclusive of the Substitution New Parcel) would expire within 12 months following the date of Substitution or within 12 months before or after the maturity date of the Loan or (ii) leases of more than 5% of the net rentable square footage of the Improvements (exclusive of the Substituted Parcel but inclusive of the Substitution New Parcel) would expire during any 12-month period during the remainder of the then-existing Term.

     (j) Borrower, and if applicable, Guarantor and Indemnitor, shall execute and deliver appropriate amendments to the Loan Documents satisfactory to Lender making the Substitution New Parcel part of the security for the Loan, Indemnitor shall execute an Environmental Indemnity with respect to the Substitution New Parcel and Lender shall receive such title assurances and endorsements to its existing policies confirming the priority of its lien on the Substitution New Parcel and extending the coverage of all insurance (including endorsements) offered under the existing policies to the Substitution New Parcel, consenting to the release of the Substituted Parcel, and otherwise confirming no adverse changes in title coverage or the amount thereof.

     (k) Borrower shall satisfy as to the Substitution in a timely fashion each of the Closing conditions set forth in this Agreement that would have been applicable if the Substitution New Parcel had been included in the original Property.

     (1) Borrower shall satisfy such conditions as Lender may reasonably require to the Substitution, including providing any consents or approvals which may be necessary pursuant to Law or documents affecting the Substituted Parcel and confirming that the Property which remains encumbered by the mortgage/deed of trust complies with applicable Law and has direct access to streets and utilities.

II. LIMITATIONS:

     (a) No Substitution will be allowed during the first 24 months of the Initial Term.

     (b) No more than three Substitutions will be allowed during the Term.

H-10-2

     (c) After giving effect to the proposed Substitution, the aggregate amount of the appraised value of the Substitution New Parcel and the appraised values of Substitution New Parcels in any prior Substitutions (measured as of the date of each such Substitution) shall not exceed $10,000,000.

     (d) In any three-month period, there shall be no more than one Substitution.

     (e) If a proposed Substitution does not comply with the terms and conditions set forth above, or if an event of default exists under the Loan Documents, the Substitution will not be permitted.

H-10-2

EX-10.17

EXHIBIT 10.17

* Portions of this exhibit have been omitted pursuant to a request for confidential treatment and have been filed separately with the Commission.

LOAN APPLICATION AND COMMITMENT AGREEMENT

July 20, 2009

Teachers Insurance and Annuity
   Association of America (the “Lender”)
730 Third Avenue
New York, NY 10017

Re:  TIAA Authorization #AAA-6906
Investment ID. #0006732
Property Name: Dallas Portfolio
Property Addresses: (various);
Dallas County and Collins County,
Texas

Ladies and Gentlemen:

     The undersigned Healthcare Realty Trust Incorporated (the “Applicant”) , with an address at 3310 West End Avenue, Suite 700, Nashville, Tennessee 37203, applies for a loan (the “Loan”) upon the terms and subject to the provisions set forth in this Loan Application and Commitment Agreement (the “Agreement”), on behalf of a to-be-formed, special-purpose limited liability company (the “Borrower”):

1. LOAN TERMS:

     (a) Loan Amount: $96,000,000 *

* In the event that the property known as Baylor-Plano Pavilion I is not included as part of the collateral, the Loan Amount will be $78,500,000.

     (b) Interest Rate:

     (i) 7.25% per annum (the “Fixed Interest Rate”) for the Initial Term (defined herein); and

     (ii) 400 basis points (i.e., hundredths of 1% per annum) over the one-month LIBOR rate (the “Floating Interest Rate”), but with a floor rate of 7.25% for any Extension Term (defined herein).

     (c) Initial Term: 7 years from the first day of the first calendar month following Closing (defined herein).

     (d) Extension Terms: Borrower shall have the option to extend the Initial Term for two, one-year floating rate Extension Terms in accordance with the provisions contained in Exhibit H-1. For purposes of this Agreement, the “Term” shall mean the Initial Term as it may be extended for one or both of the Extension Terms.

     (e) Repayment Terms: Monthly installments of principal and fixed interest calculated on a 30-year amortization schedule. The Fixed Interest Rate shall be calculated on a 30-day month/360-day year, except that payments for the first and last months of the Term, if such payments pertain to

partial months, shall be based upon the actual number of days in such months that the Loan is outstanding and a 365-day or 366-day year, as applicable. The entire outstanding principal balance plus all accrued interest and any other sums due under the Loan Documents (defined herein) will be due and payable upon the expiration of the Term.

     (f) Optional Prepayment: Borrower, at Borrower’s option, may elect to prepay the Loan in whole, but not in part, on the first day of any calendar month, upon not less than 60 days’ prior written notice to Lender and in accordance with the provisions of Exhibit A; provided, however, that Borrower shall not be permitted to make such a prepayment election during the first 24 months of the Initial Term.

2. CLOSING, CLOSING DATE AND LOAN DISBURSEMENT:

     Upon Acceptance (defined herein), and Borrower’s compliance on or before the date that is 60 days after Acceptance (the “Closing Date”) with all of the provisions of this Agreement, Lender will disburse the Loan Amount at or from Lender’s offices in New York, New York (the “Closing”).

3. SECURITY FOR LOAN:

     The Loan will be secured by a first lien on Borrower’s interests in the land, the improvements (the “Improvements”) and the other real property interests described in Exhibit C, by a first security interest in the personal property and other intangibles described in Exhibit C, by a collateral assignment of the leases affecting, and the rents, issues, profits and revenues arising from, such property, and by the additional collateral, security and security interests, if any, described or referred to in Exhibit C (collectively, the “Property”); provided that, notwithstanding the inclusion of the property known as Baylor-Piano Pavilion I in Exhibit C, Applicant shall have the right to remove Baylor-Plano Pavilion I from the Property prior to Closing if Applicant is unable to obtain the consents required to include it within the Property.

4. LIMITATION OF LIABILITY:

     The Loan will be non-recourse to Borrower except for the carve-outs from non-recourse that are specified in Exhibit G. Borrower will deliver to Lender a Guaranty of Borrower’s recourse obligations under the Loan (the “Carve-Out Guaranty”) at Closing, executed by Applicant (in such capacity, the “Guarantor”).

5. ENVIRONMENTAL INDEMNITY:

     At Closing, Borrower will deliver to Lender an Environmental Indemnity (the “Environmental Indemnity”) executed by Applicant (in such capacity, the ”Indemnitor”) in a form reasonably acceptable to Lender.

6. ACCUMULATIONS:

     At Closing and monthly thereafter, Borrower shall, pursuant to an agreement reasonably acceptable to Lender, deposit reserves for taxes and assessments against the Property with Lender or Lender’s designated agent in such amounts as Lender or its designated agent reasonably estimates to be

2

necessary to permit Lender or its designated agent to pay such taxes and assessments as and when they are due during the Term. Any funds remaining in the account upon the expiration of the Term or permitted prepayment of the Loan will be returned to Borrower.

7. DEPOSITS, FEES AND EXPENSES:

     (a) Simultaneously with Applicant’s submission of this Agreement, Applicant is delivering to Lender the following fees:

     (i) 1% of the Loan Amount (the “Application Fee”);

     (ii) $95,800 (the “Consultant Fees”) to be used only after Acceptance (unless Applicant gives Lender written authorization for use prior to Acceptance) to pay for the Appraisal, the Environmental and Compliance Reports and the Engineering Reports (all defined in Exhibit G) together with the attendant inspections (collectively, the “Consultants’ Inspections and Reports”);

     (iii) an administrative fee of $100,000 (the “Administrative Fee”) for Lender’s time and services in preparing this Agreement and in preparing for Closing, which Administrative Fee is deemed earned and nonrefundable upon Applicant’s submission of this Agreement; and

     (iv) a retainer for Lender’s outside counsel legal fees (the “Lender Legal Fees”) incurred or payable in connection with the Loan in the amount of $20,000 (the “Legal Fee Retainer”).

     (b) The Application Fee, the Legal Fee Retainer, and the Letter of Credit (defined herein) or the Additional Cash Deposit (defined herein) are in consideration of Lender’s locking the Fixed Interest Rate and conducting due diligence and analysis of the Loan, all of which Applicant acknowledges to have significant commercial value. If Lender does not accept this Agreement, Lender will return (i) the Application Fee less any reasonable, out-of-pocket expenses (not otherwise stated herein) actually incurred by Lender to date, (ii) the Legal Fee Retainer less any reasonable Lender Legal Fees incurred or payable as of that date, and (iii) the Consultant Fees less any expenses for the Consultants’ Inspections and Reports incurred by Lender pursuant to Applicant’s specific written authorization. After Acceptance, Applicant agrees to pay upon demand, regardless of whether the Loan closes and as an obligation that survives Closing or the expiration or termination of this Agreement, any costs of the Consultants’ Inspections and Reports that exceed the Consultant Fees and any reasonable Lender Legal Fees that exceed the Legal Fee Retainer.

     (c) Within 10 days following Acceptance, Applicant will deliver to Lender either an irrevocable, unconditional letter of credit (the “Letter of Credit”) or, at Applicant’s election, a cash deposit (the “Additional Cash Deposit”) in an amount equal to 1% of the Loan Amount (the Letter of Credit or the Additional Cash Deposit and the Application Fee are referred to collectively as the “Loan Deposit”). The Letter of Credit must be in form reasonably acceptable to Lender, in the required amount in favor of “Teachers Insurance and Annuity Association of America”, irrevocable, expiring no less than 60 days after the Closing Date, issued and payable by a bank approved by Lender, and unconditionally available to Lender by Lender’s drafts, at sight.

3

If the Letter of Credit is not issued and payable by a New York City bank, said Letter of Credit must give Lender the express right to present the original sight draft to the issuing bank by overnight delivery.

     (d) Lender is not obligated to pay any brokerage fee or commission or any other premium or charge in connection with this Agreement or with Closing that is based on any agreement or understanding of Applicant or Borrower with a broker, agent or finder. Borrower will indemnify, defend and hold harmless Lender against any claim for such fees, commissions, premiums or charges based on any such agreement or understanding with Applicant or Borrower, regardless of whether Lender accepts this Agreement or the Loan closes. This obligation on the part of Borrower survives Closing or the expiration or termination of this Agreement.

     (e) Notwithstanding any other provisions of this Agreement, 18.23% of the Loan Deposit shall be fully refundable to Applicant in the event Applicant elects to remove the Baylor-Plano Pavilion I property from the Property as provided in Section 3.

8. ACCEPTANCE PROCEDURE:

     Unless and until Acceptance occurs, this Agreement constitutes Applicant’s offer for Borrower to borrow the Loan Amount from Lender upon the terms and conditions set forth in this Agreement. In consideration of Lender’s engaging in initial due diligence and analysis with respect to the proposed Loan, Applicant agrees that such offer is irrevocable and exclusive for 15 days from the date Lender or its designated servicer or correspondent receives this Agreement executed by Applicant, together with the Consultant Fees, the Application Fee and the Legal Fee Retainer. All prior representations and understandings between Applicant and Lender with respect to Applicant’s offer to borrow are merged into this Agreement. Lender may accept or decline this offer in Lender’s sole discretion. This Agreement is not a binding commitment unless and until Lender accepts this Agreement as provided herein. Unless and until Acceptance occurs, Applicant is obligated only to maintain this Agreement as an irrevocable and exclusive offer for the time specified and to pay the fees, costs and expenses set forth in this Agreement and Lender is obligated only to return such fees as provided herein. If Lender approves Applicant’s application as described in this Agreement, Lender will execute and date this Agreement (the “Acceptance”). Upon Acceptance, this Agreement becomes a binding agreement, enforceable against Applicant and Lender, that obligates Borrower to accept and Lender to make the Loan upon and subject to the provisions contained in this Agreement, which alone sets forth the entire understanding between Applicant and Lender with respect to the Loan. As soon as practicable after Acceptance, Lender will deliver a copy of this Agreement to Applicant.

9. REPRESENTATIONS AND WARRANTIES BY BORROWER:

     Applicant agrees that the following representations and warranties will be correct at Closing, and Borrower will be deemed to repeat and reaffirm the same at Closing:

     (a) Borrower shall have the requisite power and authority under its organizational documents to execute and deliver the Loan Documents, to perform Borrower’s obligations under the Loan Documents and to consummate the

4

transaction contemplated by this Agreement and shall have taken any necessary action to authorize the execution and delivery of the Loan Documents, the performance of Borrower’s obligations under the Loan Documents and the consummation of the transaction contemplated by this Agreement and shall be otherwise in compliance with all applicable Law (defined herein).

     (b) Borrower shall not be an “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”) that is subject to Title I of ERISA or a “plan” as defined in Section 4975(e)(l) of the Internal Revenue Code of 1986, as amended, and the related Treasury Regulations (the “Code”) that is subject to Section 4975 of the Code, and the assets of Borrower shall not constitute “plan assets” of one or more such plans for purposes of Title I of ERISA or Section 4975 of the Code.

     (c) Borrower shall not be a “governmental plan” within the meaning of Section 3(32) of ERISA and transactions by or with Borrower shall not be subject to any laws regulating investments of and fiduciary obligations with respect to governmental plans.

     (d) None of Borrower, Guarantor or Indemnitor or any of their respective Affiliates (defined herein) (i) shall be during the Term in violation of any laws relating to terrorist acts, acts of war and money laundering (the “Anti-Terrorism Laws”), or (ii) shall be a “Prohibited Person” as defined under the Anti-Terrorism Laws or will be identified as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website http://www.treas.gov/ofac/t11_sdn.pdf or at any replacement website or official publication of such list (the “OFAC List”). For purposes of this Section 9(d), the term “Affiliate” is defined as any person that controls, is under common control with, or is controlled by the specified person, and the term “control” is defined as the power to direct or cause the direction of the management and policies of the applicable entity through ownership of voting securities or beneficial interests, by contract or otherwise, and persons having control include any general partner, managing member, manager or executive officer of the applicable entity, and any direct or indirect holder of more than 10% of the equity ownership interests of the applicable entity.

     (e) The Loan proceeds will not be used for any illegal purposes and no portion of the Property has been acquired with funds derived from illegal activities. No interest in Borrower shall have been acquired with funds derived from illegal activities.

     (f) Borrower shall covenant and agree to deliver to Lender any certification or other evidence requested from time to time by Lender in its sole discretion, confirming Borrower’s compliance with Anti-Terrorism Laws. The representations and warranties pertaining to Anti-Terrorism Laws and Borrower, Guarantor, Indemnitor or any of their respective Affiliates shall be deemed repeated and reaffirmed by Borrower as of the Closing and as of each date that Borrower makes a payment to Lender under the Loan Documents or receives any payment from Lender.

10. REPRESENTATIONS AND WARRANTIES OF APPLICANT:

     Applicant hereby represents and warrants as follows:

5

     (a) Applicant has the requisite power and authority under its organizational documents to execute and deliver this Agreement, to perform its obligations under this Agreement and to consummate the transaction contemplated by this Agreement, and has taken any necessary action to authorize the execution and delivery of this Agreement, the performance of its obligations under this Agreement and the consummation of the transaction contemplated by this Agreement and is otherwise in material compliance with applicable Law.

     (b) Applicant is not an “employee benefit plan” as defined in Section 3(3) of ERISA that is subject to Title I of ERISA or a “plan” as defined in Section 4975(e)(1) of the Code which is subject to Section 4975 of the Code, and the assets of Applicant do not constitute “plan assets” of one or more such plans for purposes of Title I of ERISA or Section 4975 of the Code.

     (c) Applicant is not a “governmental plan” within the meaning of Section 3(32) of ERISA and transactions by or with Applicant are not subject to any laws regulating investments of and fiduciary obligations with respect to governmental plans.

     (d) Applicant is not in violation of any Anti-Terrorism Laws, is not a Prohibited Person as defined under the Anti-Terrorism Laws and is not identified as a “specially designated national and blocked person” on the OFAC List.

     (e) The Loan proceeds will not be used for any illegal purposes and no portion of the Property has been acquired with funds derived from illegal activities. To Applicant’s knowledge, no interest in Applicant has been acquired with funds derived from illegal activities.

     (f) Applicant covenants and agrees to deliver to Lender any certification or other evidence requested from time to time by Lender in its sole discretion to confirm Applicant’s compliance with Anti-Terrorism Laws.

11. NOTICES, CONSENTS AND APPROVALS:

     Any notice, demand, consent or approval provided for in this Agreement will be in writing and delivered in accordance with Exhibit F.

12. ADDITIONAL PROVISIONS:

     Additional Loan terms and Closing conditions, if any, applicable to the Loan are set forth in Exhibits G and H.

13. LENDER’S APPROVAL:

     After Acceptance, Lender’s approval of, consent to or satisfaction with any matter referred to in this Agreement will not be unreasonably withheld unless expressly provided otherwise.

6

14. ASSIGNMENT:

     Applicant will not assign this Agreement without Lender’s prior consent, which may be withheld in Lender’s sole discretion.

15. APPLICABLE LAW; JURISDICTION:

     This Agreement is delivered in the State of New York and is intended to be performed in New York and construed in accordance with the laws of New York, except to the extent otherwise set forth in the Loan Documents. All legal proceedings arising out of this Agreement will be litigated in the state or federal courts located in New York, New York and Applicant consents and submits to the jurisdiction of such courts, agrees to institute any litigation arising out of this Agreement in such courts, consents to service of process by mail and waives any right it may have to transfer or change the venue of any litigation brought against Applicant by Lender arising out of this Agreement.

16. AMENDMENTS:

     Before Acceptance, Applicant cannot amend this Agreement except in writing and with Lender’s prior consent, which may be withheld in Lender’s sole discretion. After Acceptance, except as expressly provided herein, this Agreement can only be amended by an Agreement signed by Applicant and Lender. After Acceptance, Lender reserves the right:

     (i) to waive, in whole or in part, any of the provisions benefiting Lender or to extend unilaterally any date or time period prescribed for the performance by Applicant hereunder to enable Applicant to so perform; and

     (ii) to extend unilaterally the Closing Date as Lender, acting in good faith and in a commercially reasonable manner, deems necessary; provided, however, that such extensions of the Closing Date shall not exceed 60 days in the aggregate.

17. RETURN OF LOAN DEPOSIT AND EXCESS CONSULTANT FEES AND EXCESS LEGAL FEE RETAINER UPON CLOSING:

     If the Closing occurs, then Lender shall return to Applicant at Closing the Loan Deposit, any unused Consultant Fees and any unused portion of the Legal Fee Retainer as follows:

     (a) If there are no post-closing requirements to be completed, Lender will refund the Loan Deposit to Applicant, less any sums due to or on behalf of Lender (the “Net Cash Deposit”) at Closing upon Lender’s receipt of Applicant’s original, executed wiring instructions. Lender will also (i) deduct any Lender Legal Fees from the Legal Fee Retainer and then refund any excess portion of Legal Fee Retainer to Applicant at Closing, and (ii) deduct the costs of any of the Consultants’ Inspections and Reports from the Consultant Fees and then refund any excess portion of the Consultant Fees to Applicant at Closing.

     (b) If there are any post-closing requirements to be completed, Lender will retain the portion of the Net Cash Deposit reasonably determined

7

by Lender to be necessary as a reserve for costs (including any additional Lender Legal Fees) that Lender may incur in connection with Borrower’s satisfaction of such post-closing requirements. Upon Borrower’s satisfactory completion of such post-closing requirements, Lender shall promptly refund to Borrower, upon receipt of Borrower’s wiring instructions, such retained portion of the Net Cash Deposit, less any sums due to or on behalf of Lender.

18. TERMINATION:

     (a) Subject to Section 18(b), if Applicant fails to deliver the Letter of Credit or Additional Cash Deposit, as applicable, within 10 days after Acceptance or if Closing does not occur on or before the Closing Date due to Applicant’s failure to comply with the terms of this Agreement, then Lender will have the right to retain, as Lender’s sole and exclusive remedy, the Loan Deposit, which Applicant agrees will be fully earned by Lender as liquidated damages (the “Liquidated Damages”) to compensate Lender in some measure for time spent, services performed, expenses incurred and losses that Lender may incur. Applicant acknowledges that it would be extremely difficult and impractical to ascertain the extent of Lender’s damages caused by failure of the Loan to close, and that the Liquidated Damages represent a reasonable estimate of Lender’s damages and are not a penalty. If any remedy described in this Agreement is denied, Lender may pursue any alternate remedy at law or in equity.

     (b) Notwithstanding the foregoing, if (i) Lender does not approve the Appraisal, (ii) Lender cannot comply with any Law, (iii) provided Applicant has complied with all other terms and conditions of this Agreement, Lender’s approval of the Engineering Report or the Environmental and Compliance Report is conditioned upon remediation of specified conditions, the cost of which exceeds the greater of 2% of the Loan Amount or $1,000,000 in the aggregate (as reasonably determined by Lender), and Applicant has determined not to proceed with the necessary remediation, or (iv) the Closing does not occur on or before the Closing Date for any other reason (including a termination of this Agreement pursuant to Section 20(f) hereof), other than Lender’s willful default or Applicant’s failure to comply with the terms of this Agreement as set forth in Section 18 (a), then, in any such event, Lender shall give Applicant notice of same and, upon Applicant’s receipt of such notice, this Agreement shall terminate. Lender’s sole obligation under such circumstances will be to return the Loan Deposit to Applicant, together with (A) the excess of the Consultant Fees over the aggregate actual costs of the Consultants’ Inspections and Reports, and (B) the excess of the Legal Fee Retainer over the reasonable Lender Legal Fees incurred or payable to date, but less any sums due to or on behalf of Lender under this Agreement, including, if such termination is pursuant to clause (iii) above, a breakage fee in the amount of 1% of the Loan Amount.

19. NOMINEE:

     After Acceptance and upon notice to Applicant, Lender may designate a nominee to perform Lender’s obligations under this Agreement and Applicant will cause every item or document which is required under this Agreement to be delivered or assigned to Lender, to name and be delivered or assigned to Lender’s nominee, provided that such designation must occur not later than 10 days prior to Closing and no such designation by Lender shall release or

8

relieve Lender from the performance of the duties and obligations of Lender hereunder.

20. MISCELLANEOUS:

     (a) Compliance with the provisions set forth in this Agreement by Applicant and Borrower is a prerequisite to Lender’s making the Loan.

     (b) Applicant and Borrower shall retain all risk of loss with respect to the Property.

     (c) After Acceptance, Lender reserves the right to inspect the Property periodically upon reasonable advance notice to Applicant.

     (d) Any agreement by or duty imposed on Applicant or Borrower in this Agreement to perform any obligation or to refrain from any act or omission constitutes a covenant on its part and includes a covenant by Applicant or Borrower, as the case may be, to cause its partners, members, principals, agents, representatives and employees to perform the obligation or to refrain from the act or omission in accordance with this Agreement. Any statement or disclosure contained in this Agreement about facts or circumstances relating to the Property, Borrower or the Loan constitutes a representation and warranty by Applicant made as of the date of Applicant’s execution of this Agreement.

     (e) Any document, instrument or other writing to be delivered to or to be satisfactory to Lender must be reasonably satisfactory to Lender in both form and content.

     (f) Lender shall not be obligated to close the Loan in the event that there is a “Material Adverse Change”, which shall mean a change that has a material adverse effect upon the use, value or condition of the Property or upon the business, properties, assets, condition (financial or otherwise) or results of operations of Borrower or Applicant. The parties hereto acknowledge that the financial, real estate, banking and/or capital markets are presently subject to a material disruption and that any further deterioration in (or adverse change affecting) any or all of such markets as determined by Lender in its discretion would be deemed to be a Material Adverse Change for all purposes hereunder.

     (g) That certain Confidentiality Letter dated May 7, 2009, between Applicant and TIAA-CREF Global Investments, LLC remains in effect and shall not be modified or affected by the terms of this Agreement. If the Loan does not close, the Confidentiality Letter shall thereafter remain in effect in accordance with its terms. If the Loan closes, the Loan Documents will contain all confidentiality obligations among Lender, Borrower, Guarantor and Indemnitor, and the terms and provisions of the Confidentiality Letter will be merged therein.

21. DEFINITIONS AND RULES OF CONSTRUCTION:

     (a) References in this Agreement to lettered exhibits are references to the Exhibits attached to this Agreement, all of which are incorporated in and constitute a part of this Agreement. References in this Agreement and

9

the Exhibits hereto to numbered sections are references to the sections of this Agreement.

     (b) The singular of any word includes the plural and the plural includes the singular. The use of any gender includes all genders.

     (c) No inference in favor of or against any entity with respect to any provision in this Agreement may be drawn from the fact that the entity drafted this Agreement.

     (d) “Certificate” means the sworn, notarized statement of the entity giving the certificate, made by a duly authorized person satisfactory to Lender affirming the truth and accuracy of every statement in the certificate. Any document that is “certified” means the document has been appended to a Certificate of the entity certifying the document which affirms the truth and accuracy of everything in the document being certified.

     (e) The phrase “free from bankruptcy” means free from bankruptcy or reorganization proceedings and from a general assignment for the benefit of creditors.

     (f) The terms “include,” “including” and similar terms are construed as if followed by the phrase “without limitation”.

     (g) The term “Law” means all present and future codes, constitutions, cases, opinions, rules, regulations, laws, orders, ordinances, requirements and statutes, as amended, of any government that affect or that may be interpreted to affect the Property, Borrower or the Loan.

     (h) The term “person” includes a natural person, firm, partnership, limited liability company, corporation and any other public or private legal entity.

     (i) The term “provisions” includes terms, covenants, conditions, agreements and requirements.

22. EXHIBITS:

     Attached to this Agreement are the Exhibits listed below.

Exhibit A — Prepayment Premium; Evasion of Prepayment Premium

Exhibit B — Permitted Future Leasing

Exhibit C — Description of Property

Exhibit D — Schedule of Leases and Leasing Requirements

Exhibit E — Special Purpose Entity Requirements/Borrower’s Composition

Exhibit E-l — Ownership Chart

Exhibit F — Notice

Exhibit G — Closing Conditions

Exhibits H-l — H-10 — Additional Provisions

10

23. COUNTERPARTS:

     This Agreement may be executed in any number of counterparts and all of the counterparts together will constitute a single original document.

24. APPLICANT’S AGREEMENT:

     This Agreement is executed by Applicant on the date first set forth above. Applicant agrees to be bound by all of the provisions hereof, and each person executing this Agreement on behalf of Applicant represents that (s) he has full authority to bind Applicant.

HEALTHCARE REALTY TRUST INCORPORATED, a Maryland corporation 3310 West End Avenue, Suite 700 Nashville, Tennessee 37203
By:	/s/ Stephen E. Cox, Jr.
	Name:	Stephen E. Cox, Jr.
	Title:	Vice President Applicant’s Taxpayer I.D. No: 62-1507028

25. CONFIRMATION OF FIXED INTEREST RATE:

     The Fixed Interest Rate for the Loan is 7.25% per annum.

[LENDER’S SIGNATURE TO APPEAR ON THE FOLLOWING PAGE]

11

26. LENDER’S ACCEPTANCE:

     This Agreement is accepted by Lender on this 28^th day of July, 2009, and is now a binding contract between Applicant and Lender.

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
By:	/s/ William A. Lane
	Name:	William A. Lane
	Title:	Director

12

EX. A
PREPAY

EXHIBIT A

PREPAYMENT PREMIUM; EVASION OF PREPAYMENT PREMIUM

Prepayment Premium:

     Any prepayment made pursuant to Section 1(f) will include a simultaneous payment of a prepayment premium equal to the amount which is the greater of (a) an amount equal to 1% (the “Prepayment Percentage”) times the amount of the principal of the Loan outstanding on the date of prepayment (the “Prepayment Date Principal”) , or (b) the amount by which the sum of the Discounted Values (defined herein) of the Note Payments (defined herein), derived by using the Discount Rate (defined herein), exceeds the Prepayment Date Principal. In order to calculate the sum of the Discounted Values in the foregoing, each remaining Note Payment will be discounted and the resulting Discounted Values will be added together. The Loan may be prepaid without premium during the last 120 days of the Term.

Evasion of Prepayment Premium:

     If_, at any time during the Term, the Loan is accelerated after an event of default or there is any prepayment not permitted by the Loan Documents, then any tender of payment of the amount necessary to satisfy the entire Loan, any judgment of foreclosure, any sum due at foreclosure and any tender of payment during any redemption period will include, to the extent permitted by Law, an amount (the “Evasion of Prepayment Premium”) which is the greater of (a) an amount equal to the Prepayment Percentage plus 300 basis points times the Prepayment Date Principal, or (b) the amount by which the sum of the Discounted Values of the Note Payments, derived by using the Default Discount Rate (defined herein), exceeds the Prepayment Date Principal. In order to calculate the sum of the Discounted Values in the foregoing, each remaining Note Payment will be discounted and the resulting Discounted Values will be added together.

Defined Terms:

     (a) “Discount Rate” means the annual yield on a U.S. Treasury issue selected by Lender (or such other commonly used benchmark as Lender selects in its reasonable discretion, if Lender determines that U.S. Treasury issues are not commonly used as benchmarks on the date of calculation) , as reported by Bloomberg.com (or in any similar national financial newspaper, periodical or website designated by Lender if Bloomberg.com is not available), two weeks prior to prepayment, having a maturity date corresponding (or most closely corresponding, if not identical) to the last day of the then-existing Term, and, if applicable, a coupon rate corresponding (or most closely corresponding, if not identical) to the Fixed Interest Rate.

     (b) “Default Discount Rate” means the Discount Rate less 300 basis points.

A-1

     (c) “Discounted Value” means the Discounted Value of a Note Payment based on the following formula:

NP
(1 + R/12)n	=	Discounted Value

NP	=	Amount of Note Payment.
R	=	Discount Rate or Default Discount Rate as the case may be.
n	=	The number of months between the date of prepayment and the scheduled date of the Note Payment in question rounded to the nearest integer.

     (d) “Note Payments” means (i) each of the scheduled payments of monthly debt service on the Loan for the period from the first day of the month subsequent to the date of prepayment through the end of the then-existing Term and (ii) the scheduled repayment of principal, if any, at the end of the Term.

A-2

EX. B
LEASING

EXHIBIT B

PERMITTED FUTURE LEASING

     The Loan Documents will permit Borrower to enter into leases without Lender’s prior consent, provided that there is no event of default under the Loan Documents then continuing, the terms of the lease are consistent with generally prevailing market terms in the geographic region in which the Property is located, and the lease either is written on a Lender-approved form of lease or is submitted with Lender’s standard form of subordination, non-disturbance and attornment agreement executed by the tenant thereunder.

     If the Debt Service Coverage (defined herein) for the Loan declines below 1.30x, Lender reserves the right to revoke, upon 60 days’ notice, Borrower’s privilege to enter into new leases without Lender’s consent.

     The Loan Documents will require Borrower to obtain Lender’s prior consent to (a) any new lease of 20,000 square feet or more of interior space within the Improvements, and/or (b) any new lease representing 10% or more of the gross revenues or of the net rentable area of the Property.

     Lender agrees to use best efforts to respond to requests for new lease approvals within 10 business days of notice thereof. No additional fee shall be due to Lender in connection with any request for Lender’s consent to a lease, provided that Borrower shall agree to reimburse Lender for reasonable legal fees incurred by Lender in responding to such request in an amount not to exceed $1,000 per request.

     Borrower will deliver to Lender an original or certified copy of each new lease, together with a reasonably detailed lease abstract, within 30 days after execution of the lease.

     The term “Debt Service Coverage” shall mean the Net Operating Income (defined herein) of the Property for the 12 months ending as of the end of the mostly recently ended fiscal quarter of Borrower divided by the amount of scheduled monthly debt service payments over such period. The term “Net Operating Income” shall mean the gross revenues derived from the Property after payment of annual insurance premiums, taxes and assessments and operating expenses of the Property (including ground rent if any). “Operating expenses of the Property” shall not include interest expense, income taxes, depreciation, amortization, capital costs (including tenant improvements), extraordinary expenses, and out-of-period revenue or expense adjustments.

B-1

EX. C
PROPERTY

EXHIBIT C

DESCRIPTION OF PROPERTY

Location: See attached Property Summary.

Land: See attached Property Summary.

Improvements: See attached Property Summary.

Title: Leasehold as to Land and Improvements by virtue of one or more ground leases. Additional provisions relating to the leasehold estate(s) are set forth in Exhibit H.

Personal Property: Borrower’s interest in any personal property located on the land or in the Improvements and essential to the operation and enjoyment of the Property including furniture, furnishings, equipment, appliances, accounts receivable, general intangibles, licenses, permits and the like.

Additional Collateral: Borrower’s interest in any operating agreements, reciprocal easement agreements, management agreements and other material agreements affecting the Property. In addition, Borrower’s interest in all reserve accounts required by this Agreement and any additional security, collateral or credit enhancements described in Exhibit H, if any.

C-1

DALLAS PORTFOLIO PROPERTY SUMMARY

Number

Ground

GL

Year Built/

of

Square

Current

Lease

Renewal

Property

Address

City

State

Renovated

Ownership

Tenants

Footage

Occupancy

Expiration

Options

Baylor — Landry Tower & Fitness Center

411 N. Washington Avenue

Dallas

TX

1989/2007

Ground Lease

23

217,114

*

12/31/2059

2 terms of 10 years

Baylor — Barnett Tower

3600 Gaston Avenue

Dallas

TX

1974/2006

Ground Lease

64

176,659

*

12/31/2059

2 terms of 10 years

Baylor — Wadley Tower

3600 Gaston Avenue

Dallas

TX

1974/2005

Ground Lease

54

176,442

*

12/31/2059

2 terms of 10 years

Baylor — Sammons Tower

3409 Worth Street

Dallas

TX

1986/2005

Ground Lease

23

78,301

*

12/31/2059

2 terms of 10 years

Baylor — Surgicare Building

3920 Worth Street

Dallas

TX

1983

Ground Lease

1

16,977

*

12/31/2059

2 terms of 10 years

Baylor — Geriatrics Center

4004 Worth Street

Dallas

TX

1988/2006

Ground Lease

6

24,961

*

12/31/2059

2 terms of 10 years

Baylor — Medical Pavilion 1

3900 Junius Street

Dallas

TX

2007

Ground Lease

13

171,033

*

12/31/2059

2 terms of 10 years

Baylor — Plano Pavilion 1

4708 Alliance Boulevard

Plano

TX

2004

Ground Lease

34

174,316

*

9/30/2054

1 term of 10 years

Total 8

1,035,803

95.7

%

¹ Recent construction. Property still in lease-up, currently 50% leased. For purposes of this analysis, assumes Owner master-leases the vacant space to market levels to reflect stabilized performance.

C-2

EX. D
PROPERTY

EXHIBIT D

SCHEDULE OF LEASES AND LEASING

     In addition to the other provisions in this Agreement, it is a condition to Closing that the leasing described below is in effect at Closing, with tenants satisfactory to Lender in physical occupancy that are paying rent and free from bankruptcy. Such leasing represents the minimum leasing required for Borrower to qualify for the Loan.

     In addition to the other provisions in this Agreement, the conditions to Closing include the following: (i) not less than 90% of the leasing on the attached rent roll shall be in effect at Closing with tenants in physical occupancy, paying rent and free from bankruptcy (which leasing shall include a master lease in form and substance reasonably acceptable to Lender from Borrower for all vacant space up to 90% of the net rentable area of the Baylor-Medical Pavilion), and (ii) the Property shall have a minimum projected annual Net Operating Income of $11,000,000** and Debt Service Coverage as of the Closing of at least 1.40x.

** In the event that the property known as Baylor-Piano Pavilion I is not included as part of the collateral, the minimum projected annual Net Operating Income threshold will be $7,900,000.

     Applicant represents and warrants that, on the date on which Applicant has executed this Agreement, all existing leases of space within the Improvements are listed on the rent roll attached to this Agreement, which rent roll includes the square footage, commencement date, expiration date, current rent and future rent (if such future rent is subject to a set increase) for each tenant and a summary of each tenant’s operating expense reimbursement. Notwithstanding the foregoing, Applicant agrees that it shall, within 15 business days after Acceptance, provide to Lender a summary of any tenant purchase options, early lease termination options and lease renewal options.

D-1

RENT ROLL

Entity id	Building	Total		Leased		Occupancy
Bay101	Landry		217,114		*		*
Bay102	Wadley		176,442		*		*
Bay103	Barnett		176,659		*		*
Bay105	Sammons		78301		*		*
Bayl06	Geriatrics		24,961		*		*
Bay107	Surgicare		16,977		*		*
Bayl22	Medical Pavilion		171,033		*		*
Plano01	Plano		174316		*		*
Total			1,035,803		*		*
Total ex Piano			861,487		825,541		95.8	%

D-2

Baylor — Landry Tower and Fitness Center

Tenant Rent Roll

Update on Expired

Leased

Annual

Annual

Base Year/

Leases/Leases

Lease Start

Expiration

Base Rent

Other

Expense

Rent

Expense Stop

Gross

Expiring before

Suite

Tenant

Date

Date

Leased Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

999 (2)

*

*

*

*

*

*

*

1000

*

*

*

*

*

*

*

1100

*

*

*

*

*

*

*

1200

*

*

*

*

*

*

*

*

1300

*

*

*

*

*

*

*

*

1900

*

*

*

*

*

*

*

*

*

2000

*

*

*

*

*

*

*

2100

*

*

*

*

*

*

*

*

*

2200

*

*

*

*

*

*

*

*

2400

*

*

*

*

*

*

*

2600

*

*

*

*

*

*

*

2700

*

*

*

*

*

*

*

*

2750

*

*

*

*

*

*

*

*

2800

*

*

*

*

*

*

*

3000

*

*

*

*

*

*

*

*

3100

*

*

*

*

*

*

*

D-3

Update on Expired

Lease

Annual

Annual

Base Year/

Leases/Leases

Lease Start

Expiration

Base Rent

Other

Expense

Rent

Expense Stop

Gross

Expiring before

Suite

Tenant

Date

Date

Leased Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

4000

*

*

*

*

*

*

*

*

5000

*

*

*

*

*

*

*

5100

*

*

*

*

*

*

*

5300

*

*

*

*

*

*

*

5400

*

*

*

*

*

*

*

6000

*

*

*

*

*

*

*

6200

*

*

*

*

*

*

*

6400

*

*

*

*

*

*

*

7000

*

*

*

*

*

*

*

7500

*

*

*

*

*

*

*

1400A

*

*

*

*

*

*

*

*

1400Z

*

*

*

*

*

*

*

2100Z

*

*

*

*

*

*

*

*

*

Total Sq Ft (1)

217,114

Occupied Sq Ft (1)

*

Occupancy %(1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-4

Baylor Wadley Tower

Tenant Rent Roll

Update on Expired

Lease

Annual

Annual

Base Year/

Leases/Leases

Lease Start

Expiration

Base Rent

Other

Expense

Rent

Expense Stop

Gross

Expiring before

Suite

Tenant

Date

Date

Leased Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

20

*

*

*

*

*

*

*

40

*

*

*

*

*

*

*

45

*

*

*

*

*

*

*

150

*

*

*

*

*

*

*

*

151

*

*

*

*

*

*

*

*

160

*

*

*

*

*

*

*

*

170

*

*

*

*

*

*

*

*

200

*

*

*

*

*

*

*

203

*

*

*

*

*

*

*

*

205

*

*

*

*

*

*

*

*

254

*

*

*

*

*

*

*

*

256

*

*

*

*

*

*

*

*

260

*

*

*

*

*

*

*

*

261

*

*

*

*

*

*

*

D-5

Update on Expired

Lease

Annual

Annual

Base Year/

Leases/Leases

Lease Start

Expiration

Base Rent

Other

Expense

Rent

Expense Stop

Gross

Expiring before

Suite

Tenant

Date

Date

Leased Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

262

*

*

*

*

*

*

*

*

360

*

*

*

*

*

*

*

*

450

*

*

*

*

*

*

*

454

*

*

*

*

*

*

*

456

*

*

*

*

*

*

*

457

*

*

*

*

*

*

*

468

*

*

*

*

*

*

*

550

*

*

*

*

*

*

*

554

*

*

*

*

*

*

*

556

*

*

*

*

*

*

*

558

*

*

*

*

*

*

*

560

*

*

*

*

*

*

*

561

*

*

*

*

*

*

*

651

*

*

*

*

*

*

*

654

*

*

*

*

*

*

*

655

*

*

*

*

*

*

*

*

656

*

*

*

*

*

*

*

751

*

*

*

*

*

*

*

755

*

*

*

*

*

*

*

760

*

*

*

*

*

*

*

D-6

Update on Expired

Lease

Annual

Annual

Base Year/

Leases/Leases

Lease Start

Expiration

Base Rent

Other

Expense

Rent

Expense Stop

Gross

Expiring before

Suite

Tenant

Date

Date

Leased Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

851

*

*

*

*

*

*

*

*

854

*

*

*

*

*

*

*

*

856

*

*

*

*

*

*

*

858

*

*

*

*

*

*

*

955

*

*

*

*

*

*

*

958

*

*

*

*

*

*

*

960

*

*

*

*

*

*

*

962

*

*

*

*

*

*

*

*

964

*

*

*

*

*

*

*

999(2)

*

*

*

*

*

*

*

1051

*

*

*

*

*

*

*

1052

*

*

*

*

*

*

*

1054

*

*

*

*

*

*

*

1055

*

*

*

*

*

*

*

1056

*

*

*

*

*

*

*

1057

*

*

*

*

*

*

*

1058

*

*

*

*

*

*

*

1151

*

*

*

*

*

*

*

1155

*

*

*

*

*

*

*

D-7

Update on Expired

Lease

Annual

Annual

Base Year/

Leases/Leases

Lease Start

Expiration

Base Rent

Other

Expense

Rent

Expense Stop

Gross

Expiring before

Suite

Tenant

Date

Date

Leased Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

1158

*

*

*

*

*

*

*

1160

*

*

*

*

*

*

*

1251

*

*

*

*

*

*

*

254A

*

*

*

*

*

*

*

*

656A

*

*

*

*

*

*

*

Total Sq Ft (1)

176,442

Occupied Sq Ft (1)

*

Occupancy % (1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-8

Baylor — Barnet Tower

Tenant Rent Roll

Base Year/

Update on Expired

Lease

Annual

Annual

Expense

Leases/Leases

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

Expiring before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

50

*

*

*

*

*

*

*

*

100

*

*

*

*

*

*

*

101

*

*

*

*

*

*

*

107

*

*

*

*

*

*

*

109

*

*

*

*

*

*

*

128

*

*

*

*

*

*

*

204

*

*

*

*

*

*

*

206

*

*

*

*

*

*

*

*

207

*

*

*

*

*

*

*

*

208

*

*

*

*

*

*

*

*

220

*

*

*

*

*

*

*

*

300

*

*

*

*

*

*

*

303

*

*

*

*

*

*

*

401

*

*

*

*

*

*

*

*

402

*

*

*

*

*

*

*

502

*

*

*

*

*

*

*

403

*

*

*

*

*

*

*

*

D-9

Base Year/

Update on Expired

Lease

Annual

Annual

Expense

Leases/Leases

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

Expiring before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

404

*

*

*

*

*

*

*

*

406

*

*

*

*

*

*

*

410

*

*

*

*

*

*

*

411

*

*

*

*

*

*

*

504

*

*

*

*

*

*

*

506

*

*

*

*

*

*

*

508

*

*

*

*

*

*

*

600

*

*

*

*

*

*

*

601

*

*

*

*

*

*

*

*

605

*

*

*

*

*

*

*

609

*

*

*

*

*

*

*

703

*

*

*

*

*

*

*

705

*

*

*

*

*

*

*

706

*

*

*

*

*

*

*

707

*

*

*

*

*

*

*

708

*

*

*

*

*

*

*

709

*

*

*

*

*

*

*

710

*

*

*

*

*

*

*

712

*

*

*

*

*

*

*

801

*

*

*

*

*

*

*

*

805

*

*

*

*

*

*

*

806

*

*

*

*

*

*

*

809

*

*

*

*

*

*

*

D-10

Base Year/

Update on Expired

Lease

Annual

Annual

Expense

Leases/Leases

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

Expiring before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

901

*

*

*

*

*

*

*

*

902

*

*

*

*

*

*

*

904

*

*

*

*

*

*

*

905

*

*

*

*

*

*

*

*

906

*

*

*

*

*

*

*

907

*

*

*

*

*

*

*

911

*

*

*

*

*

*

*

912

*

*

*

*

*

*

*

999 (2)

*

*

*

*

*

*

*

1001

*

*

*

*

*

*

*

*

1002

*

*

*

*

*

*

*

*

1004

*

*

*

*

*

*

*

1005

*

*

*

*

*

*

*

1006

*

*

*

*

*

*

*

1101

*

*

*

*

*

*

*

1107

*

*

*

*

*

*

*

1109

*

*

*

*

*

*

*

1201

*

*

*

*

*

*

*

1202

*

*

*

*

*

*

*

1205

*

*

*

*

*

*

*

1209

*

*

*

*

*

*

*

D-11

Base Year/

Update on Expired

Lease

Annual

Annual

Expense

Leases/Leases

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Stop

Gross

Expiring before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

S09A

*

*

*

*

*

*

*

1101A

*

*

*

*

*

*

*

1109A

*

*

*

*

*

*

*

204A

*

*

*

*

*

*

*

P1

*

*

*

*

*

*

*

SI3

*

*

*

*

*

*

*

Total Sq Ft (1)

176,659

Occupied Sq Ft (1)

*

Occupancy %(1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-12

Baylor Sammons Tower

Tenant Rent Roll

Base

Annual

Year/

Update on Expired

Lease

Base

Annual

Expense

Leases/Leases

Lease Start

Expiration

Leased

Rent

Other

Expense

Rent

Stop

Gross

Expiring before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

300

*

*

*

*

*

*

*

320

*

*

*

*

*

*

*

*

330

*

*

*

*

*

*

*

*

340

*

*

*

*

*

*

*

*

400

*

*

*

*

*

*

*

*

410

*

*

*

*

*

*

*

*

420

*

*

*

*

*

*

*

500

*

*

*

*

*

*

*

530

*

*

*

*

*

*

*

*

540

*

*

*

*

*

*

*

600

*

*

*

*

*

*

*

*

601

*

*

*

*

*

*

*

*

602

*

*

*

*

*

*

*

*

D-13

Base

Annual

Year/

Update on Expired

Lease

Base

Annual

Expense

Leases/Leases

Lease Start

Expiration

Leased

Rent

Other

Expense

Rent

Stop

Gross

Expiring before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

610

*

*

*

*

*

*

*

*

630

*

*

*

*

*

*

*

640

*

*

*

*

*

*

*

700

*

*

*

*

*

*

*

710

*

*

*

*

*

*

*

*

720

*

*

*

*

*

*

*

*

725

*

*

*

*

*

*

*

*

730

*

*

*

*

*

*

*

*

D-14

Base

Annual

Year/

Update on Expired

Lease

Base

Annual

Expense

Leases/Leases

Lease Start

Expiration

Leased

Rent

Other

Expense

Rent

Stop

Gross

Expiring before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

740

*

*

*

*

*

*

*

*

999 (2)

*

*

*

*

*

*

*

410A

*

*

*

*

*

*

*

*

Total Sq Ft (1)

78,301

Occupied Sq Ft (1)

*

Occupancy %(1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-15

Baylor — Geriatrics Center

Tenant Rent Roll

Lease

Annual

Annual

Base Year/

Update on Expired Leases/Leases

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Expense Stop

Expiring before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Gross Up

10/31/09

50

*

*

*

*

*

*

*

*

55

*

*

*

*

*

*

*

*

100

*

*

*

*

*

*

*

*

300

*

*

*

*

*

*

*

*

999(2)

*

*

*

*

*

*

*

*

200A

*

*

*

*

*

*

*

*

200B

*

*

*

*

*

*

*

*

Total Sq Ft (1)

24,961

Occupied Sq Ft (1)

*

Occupancy %(1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-16

Baylor — Surgicare Building

Tenant Rent Roll

Lease

Annual

Annual

Base Year/

Update on Expired Leases/Leases

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Expense Stop

Expiring before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Gross Up

10/31/09

100

*

*

*

*

*

*

*

999(2)

*

*

*

*

*

*

Total Sq Ft (1)

16,977

Occupied Sq Ft (1)

*

Occupancy % (1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-17

Baylor Medical Pavilion

Tenant Rent Roll

Lease

Annual

Annual

Base Year/

Update on Expired Leases/Leases

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Expense Stop

Expiring before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Gross Up

10/31/09

100

*

*

*

*

*

*

*

*

125

*

*

*

*

*

*

*

145

*

*

*

*

*

*

*

200

*

*

*

*

*

*

*

*

220

*

*

*

*

*

*

*

240

*

*

*

*

*

*

*

605

*

*

*

*

*

*

*

615

*

*

*

*

*

*

*

640

*

*

*

*

*

*

*

705

*

*

*

*

*

*

*

710

*

*

*

*

*

*

*

740

*

*

*

*

*

*

*

TBD(3)

*

*

*

*

*

*

*

D-18

Lease

Annual

Annual

Base Year/

Update on Expired Leases/Leases

Lease Start

Expiration

Leased

Base Rent

Other

Expense

Rent

Expense Stop

Expiring before

Suite

Tenant

Date

Date

Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Gross Up

10/31/09

Shell

*

*

Total Sq Ft (1)

171,033

Occupied Sq Ft (1)

*

Occupancy %(1)

*

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.
(3)	to be executed burnoff master lease from the Borrower for all vacant space up to 90% of the net rentable area of the building

D-19

Plano Pavilion I

Tenant Rent Roll

Base Year/

Update on Expired

Lease

Annual

Annual

Expense

Leases/Leases

Lease Start

Expiration

Base Rent

Other

Expense

Rent

Stop

Gross

Expiring before

Suite

Tenant

Date

Date

Leased Sq., Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

110

*

*

*

*

*

*

*

*

*

150

*

*

*

*

*

*

*

*

*

175

*

*

*

*

*

*

*

200

*

*

*

*

*

*

*

*

*

*

210

*

*

*

*

*

*

*

*

*

*

240

*

*

*

*

*

*

*

*

*

450

*

*

*

*

*

*

*

*

*

*

475

*

*

*

*

*

*

*

485

*

*

*

*

*

*

*

600

*

*

*

*

*

*

*

610

*

*

*

*

*

*

*

620

*

*

*

*

*

*

*

*

630

*

*

*

*

*

*

*

*

635

*

*

*

*

*

*

*

650

*

*

*

*

*

*

*

685

*

*

*

*

*

*

*

*

D-20

Base Year/

Update on Expired

Lease

Annual

Annual

Expense

Leases/Leases

Lease Start

Expiration

Base Rent

Other

Expense

Rent

Stop

Gross

Expiring before

Suite

Tenant

Date

Date

Leased Sq. Ft.

PSF

Income

Reimbursement

Escalations

$ Amount

Up

10/31/09

700

*

*

*

*

*

*

*

*

*

725

*

*

*

*

*

*

*

*

*

750

*

*

*

*

*

*

*

770

*

*

*

*

*

*

*

780

*

*

*

*

*

*

*

*

*

785

*

*

*

*

*

*

*

790

*

*

*

*

*

*

*

800

*

*

*

*

*

*

*

*

*

810

*

*

*

*

*

*

*

*

*

820

*

*

*

*

*

*

*

825

*

*

*

*

*

*

*

830

*

*

*

*

*

*

*

*

*

835

*

*

*

*

*

*

*

*

*

*

850

*

*

*

*

*

*

*

*

*

860

*

*

*

*

*

*

*

870

*

*

*

*

*

*

*

*

*

999

(2)

*

*

*

*

*

*

*

Total Sq Ft (1)

174,316

Occupied Sq Ft (1)

*

Occupancy % (1)

*

D-21

(1)	the 999 suites are included in total square footage and the occupied square footage
(2)	the 999 suites correct for any discrepancies in the total square footage of the building and the deemed square footage of the suites due to useable vs rentable measurements, deemed vs actual common area factors, etc.

D-22

EX. E
COMPOSITION

EXHIBIT E

SPECIAL PURPOSE ENTITY REQUIREMENTS/BORROWER’S COMPOSITION

     Applicant agrees that the following will be correct at Closing, and Borrower will recertify the following at Closing:

     (a) Borrower is and will continue to be a Single Purpose Entity and if Borrower is a general partnership, each of Borrower’s general partners is and will continue to be a corporation, limited partnership or limited liability company which is a Single Purpose Entity. “Single Purpose Entity” means an entity whose organizational documents set forth single purpose entity covenants satisfactory to Lender, in its sole discretion, including covenants that the entity:

     (i) is formed solely for the purpose of owning, managing and operating the Property and is not engaged and will not engage, either directly or indirectly, in any business other than the ownership, management and operation of the Property;

     (ii) does not have and will not acquire or use any assets other than the Property and personal property incidental to the business of owning, managing and operating the Property and activities incidental thereto; without limiting the foregoing, the Property shall be operated as a single property or project, generating substantially all of Borrower’s gross income, it being the intent that the Property shall constitute “single asset real estate” for purposes of Section 362(d)(3) of the Bankruptcy Code;

     (iii) will not liquidate or dissolve (or suffer any liquidation or dissolution), or enter into any transaction of merger or consolidation, or acquire by purchase or otherwise all or substantially all the business or assets of, or any stock or other evidence of beneficial ownership of, any entity;

     (iv) will not, nor will any partner, limited or general, member or shareholder thereof, as applicable, violate the terms of its partnership certificate, partnership agreement, articles of incorporation, bylaws, operating agreement, articles of organization or other formation agreement or document, as applicable;

     (v) will observe, if it is a limited liability company, all limited liability company formalities that relate to the entity’s separateness pursuant to its formation documents, operating agreement, bylaws or partnership agreement (as the case may be), or any other organizational filing or document governing its affairs;

     (vi) has not and will not guarantee, pledge its assets for the benefit of, or otherwise become obligated for, the obligations of any other person or hold out its credit or assets as being available to satisfy the obligations of any other person except for obligations for

E-1

indemnification and other obligations of Borrower pursuant to its operating agreement, bylaws or partnership agreement, as applicable;

     (vii) has not incurred and will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (A) the Loan and (B) unsecured trade debt incurred in the ordinary course of business (not evidenced by a note) and paid in the ordinary course of business in connection with owning, operating and maintaining the Property, provided that such indebtedness is paid within 90 days of when incurred (unless the claim for such indebtedness is disputed in good faith and cash reserves are maintained therefor during the period of such dispute which would be sufficient to discharge fully such indebtedness);

     (viii) will be and will at all times hold itself out to the public as a legal entity separate and distinct from any other entity (including, without limitation, any affiliate (defined herein), general partner or member, as applicable, or any affiliate of any of its general partners or members, as applicable), will correct any known misunderstanding concerning its separate identity, and will not identify any other entity (including, without limitation, any affiliate, general partner or member, or any affiliate of any of its general partners or members, as applicable) as a division or part of it;

     (ix) subject to the management of the Property by a property manager using a single operating account and to the commingling of reserves and other funds held by Lender as required under the Loan Documents, will not commingle its funds or assets with those of any other person, and will maintain and account for its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any other person;

     (x) will maintain its own separate, complete and accurate accounts, books, records and financial statements complying with GAAP, provided that it may file or may be part of a consolidated federal tax return to the extent required or permitted by applicable Law so long as there is an appropriate notation indicating its separate existence and its assets and liabilities;

     (xii) will pay its obligations and expenses from its own funds and assets (to the extent that it has funds to do so);

     (xiii) will not have any paid manager or director for the entity (other than the Independent Manager (defined herein)) and, to the extent it has any employees, it will pay the salaries of its own employees from its own funds and in the absence of such paid employees, it will obtain all necessary services through third parties or independent contractors;

E-2

     (xiv) will conduct and operate business in its own name or in the name of the Property, will allocate fairly and reasonably any overhead for shared office space and use separate stationary, invoices and checks;

     (xv) will not enter into or be a party to any transaction with any of its general partners, principals, affiliates or members, as applicable, or any affiliate of any of its general partners, principals or members, except in the ordinary course of business and upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arms-length basis with a third party other than an affiliate;

     (xvi) will not make loans or advance credit to any person (including affiliates) other than to tenants of the Property in the form of tenant allowances or tenant improvements, provided that this covenant shall not preclude such entity from amending or modifying the financial terms of leases for the Property pursuant to lease amendments or modifications completed in accordance with the provisions of the Loan Documents;

     (xvii) will not take any action which, under the terms of its formation document or other applicable organizational documents, requires the unanimous consent of all directors, partners or members, as applicable, without such required vote;

     (xviii) will not engage in, seek or consent to any dissolution, winding up, liquidation, consolidation, merger, asset sale, bankruptcy or insolvency filing, or material amendment to or modification (including any amendments or modifications of its separateness covenants) of its partnership agreement, articles of incorporation, bylaws, operating agreement, articles of organization or other formation agreement or document, as applicable, without the required written consent of Lender;

     (xix) will continue to operate its business with the goal of maintaining capital which is adequate for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations, to the extent funds are available from the Property; and

     (xx) will not fail at any time to have at least one Independent Manager that will vote on material matters affecting it, which matters shall include (a) any proposed insolvency or bankruptcy proceeding of such entity, (b) incurring indebtedness outside the ordinary course of business, (c) any merger or consolidation of it with any other entity, (d) any dissolution or liquidation of such entity, and (e) any amendment or modification of any provision of its organizational documents relating to company purpose, title to or management of the Property, its bankruptcy-remote status, and/or the admission or removal of general partners or members, as the case may be, provided that no

E-3

termination or change of the Independent Manager shall be made without giving Lender at least 20 days’ prior written notice, which notice shall include a copy of any bio-profile or resume of such replacement Independent Manager.

Borrower shall agree to keep the Single Purpose Entity covenants set forth in this paragraph (a) and such covenants will be included in the Loan Documents and shall be, at the time of the Closing, included in Borrower’s organizational documents.

     As used herein, the term “Independent Manager” shall mean a duly appointed member of the board of directors or board of managers who is provided by a nationally-recognized company that provides professional independent directors/managers who shall not have been at the time of initial appointment or at any time while serving as an Independent Manager, and may not have been at any time during the preceding five years, (i) a stockholder, director, officer, employee, partner, attorney or counsel of Borrower or any affiliate of Borrower, (ii) a customer, supplier or other person who derives any of its purchases or revenues from its activities with such entity or any affiliate of Borrower, (iii) a person controlling or under common control with any such stockholder, partner, customer, supplier or other person, or (iv) a member of the immediate family of any such stockholder, director, officer, employee, partner, customer, supplier or other person. For purposes of this Exhibit E, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a person, whether through ownership of voting securities, by contract or otherwise, and the term “affiliate” means for the specified person: (1) any person directly or indirectly owning, controlling or holding with power to vote 10% or more of the outstanding voting securities or interests of such specified person; (2) any person 10% or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote by such specified person; (3) any person directly or indirectly controlling, controlled by or under common control with such specified person; (4) any officer, director or partner of such specified person; (5) if such specified person is an officer, director or partner, any entity for which such person or entity acts in any such capacity; and (6) any close relative or spouse of such specified person if an individual.

     If Borrower is a single-member limited liability company, then such limited liability company must be duly organized and in good standing under the laws of Delaware.

     (b) Borrower shall be duly organized and in good standing and qualified to do business in the state where the Property is located. Applicant will, prior to the Closing, transfer the Property to Borrower if Borrower is not currently the owner thereof.

     (c) Attached hereto as Exhibit E-l is an Ownership Chart prepared by Applicant that shows Borrower’s proposed ownership structure, including the name, state of formation and type of entity of Borrower and each of

E-4

Borrower’s constituents and their respective percentage interests in Borrower, and showing the complete form of signature block for Borrower, including the name and title of its authorized representative.

     (d) Applicant will deliver to Lender no later than 20 days before Closing, all applicable organizational documents of Borrower and its constituents and of Applicant, and will identify all owners of 10% or more of direct or indirect ownership interests in Borrower, the percentage interest of each such owner, and Borrower’s taxpayer identification number and address if different from Applicant’s as indicated in Section 24. After Lender’s approval, none of the foregoing may be amended without Lender’s consent.

     (e) The Ownership Chart and all organizational documents and information delivered or to be delivered to Lender are correct and complete, and Borrower shall be deemed to have recertified the same as of the Closing Date.

E-5

EX. E-l
OWNERSHIP CHART

EXHIBIT E — l

OWNERSHIP CHART

E-1-1

[NAME OF BORROWER] , a Delaware limited liability company
By:
	Title:

Authorized Representatives:

David R. Emery—President and Chief Executive Officer
B. Douglas Whitman, II—Executive Vice President and Chief Operating Officer
Scott W. Holmes—Executive Vice President and Chief Financial Officer
John M. Bryant, Jr.—Executive Vice Present and General Counsel
Todd J. Meredith—Senior Vice President—Real Estate Investments
Brince R. Wilford—Senior Vice President—Real Estate Investments
Julie A. Wilson—Senior Vice President
Frederick M. Langreck—Senior Vice President, Treasurer
                                            and Assistant Secretary
James C. Douglas—Vice President—Asset Administration
Stephen E. Cox, Jr.—Vice President and Assistant General Counsel
Andrew E. Loope—Vice President and Corporate Counsel
Rita H. Todd—Secretary

E-1-2

EX. F
NOTICE

EXHIBIT F

NOTICE

All acceptances, approvals, consents, demands, notices, requests and other communications (the “Notices”) required or permitted to be given under this Agreement must be in writing and sent by certified mail, return receipt requested, or by nationally recognised overnight delivery service that provides evidence of the date of delivery, with all charges prepaid (for next business day delivery if sent by overnight delivery service), addressed to the appropriate party at its address listed below:

If to Applicant or Borrower:	Healthcare Realty Trust Incorporated
	3310 West End Avenue, Suite 700
	Nashville, Tennessee 37203
	Attn: James C. Douglas
with courtesy copies to:	Healthcare Realty Trust Incorporated
	3310 West End Avenue, Suite 700
	Nashville, Tennessee 37203
	Attn: General Counsel
	and
	Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C.
	211 Commerce Street, Suite 1000
	Nashville, Tennessee 37201
	Attn: David J. White
If to Lender:	Teachers Insurance and Annuity Association
	730 Third Avenue
	New York, New York 10017
	Attn: Director, Global Private Markets, Portfolio Management
	TIAA Authorization #AAA-6906
	Investment ID. #0006732
with courtesy copies to:	Teachers Insurance and Annuity Association
	730 Third Avenue
	New York, New York 10017
	Attn: Associate General Counsel and Director, Asset Management Law
	TIAA Authorization #AAA-6906
	Investment ID. #0006732

F-1

and

Teachers Insurance and Annuity Association

8500 Andrew Carnegie Boulevard

Mailstop: 8500N-C2-07

Charlotte, North Carolina 28262

Attn: Nicole Brovet Cantu

Lender and Applicant each may change the address to which Notices must be sent, by notice given in accordance with the provisions of this Exhibit F. All Notices given in accordance with the provisions of this Exhibit F will be deemed to have been received upon the date of receipt if sent by certified mail, or one business day after having been deposited with a nationally recognized overnight delivery service if sent by overnight delivery. Notwithstanding the foregoing, any Notice sent to the last designated address of any person to which it is required to be sent pursuant to this Agreement shall not be deemed ineffective if actual delivery cannot be made due to a change of address of the person to which the Notice is directed or the refusal of such person to accept delivery thereof.

F-2

EX. G
CLOSING CONDITIONS

EXHIBIT G

CLOSING CONDITIONS

     Lender’s obligation to make the Loan is subject to timely satisfaction of the conditions set forth below:

     1. Applicant shall have delivered (or caused Borrower or title company to deliver) to Lender the following items relating to the Property as soon as practicable after Acceptance and a reasonable period of time prior to Closing but in all cases in accordance with any time period specifically set forth below, all items to be reasonably satisfactory to Lender (and Applicant acknowledges that Acceptance does not constitute Lender’s approval of any items delivered to Lender prior to Acceptance):

     (a) originals or certified copies of all operating agreements and ground leases affecting the Property to which Applicant or any of its affiliates is a party (including, without limitation, any master ground lease or other ground lease affecting the Property), and copies of reciprocal easement agreements, management agreements, material agreements all non-residential leases, including leases described or referred to in Exhibit D, together with any short form leases, amendments, addenda, exhibits, lease guarantees or assignments relating thereto, and as soon as practicable after execution, copies of all non-residential leases or other material agreements affecting the Property executed after the initial delivery of leases and other material agreements hereunder. After Lender’s approval, none of the foregoing may be amended without Lender’s prior consent;

     (b) two copies of the standard proposed form lease for the Property, which may not be amended in any material respect after approval by Lender;

     (c) final plans and specifications for the Improvements described in Exhibit C for any portion of the Improvements that is in Seismic Zone 3 or 4;

     (d) a current title report or binder (including the fee underlying any leasehold estate), a search of appropriate UCC records, and, at Closing, an ALTA Loan Title Insurance Policy with such coinsurance, reinsurance and endorsements as Lender deems necessary issued by a title insurance company approved by Lender and excluding any creditors’ rights exceptions or exclusions;

     (e) a current ALTA as-built survey certified to Lender;

     (f) a pro forma certification of the rent roll verifying information about the leases affecting the Property (to be revised as necessary with new or amended information arising after the pro forma was prepared), certified by Borrower no more than 15 days and not less than 5 days before Closing, which rent roll shall include (i) the square footage, commencement date, expiration date, current rent and future rent (if such future rent is subject to a set increase), (ii) a summary of each tenant’s lease provision(s) for reimbursement of operating expenses, real estate taxes and insurance

G-1

premiums, and (iii) a summary of any tenant purchase options, early lease termination options and lease renewal options;

     (g) not less than 30 days before Closing, an original or certified copy of insurance policies and evidence of payment of the insurance premium for full replacement cost of the Improvements and Personal Property referred to in Exhibit C (without deduction for depreciation), which insurance will include fire and sprinkler leakage, extended coverage, vandalism, malicious mischief, boiler and machinery, terrorism coverage, windstorm, earthquake and flood insurance (if located in earthquake or flood zones), a minimum of 12 months of rent loss insurance, and such other kinds of insurance as may be required by Lender in its sole discretion, premiums prepaid, issued by companies and in amounts reasonably satisfactory to Lender, with a standard mortgagee endorsement in Lender’s favor for the property insurance, an additional insured endorsement in Lender’s favor for liability insurance and a waiver of subrogation endorsement, where applicable;

     (h) an original or certified copy of the unconditional certificate of occupancy or other unconditional certificate of appropriate governmental authorities evidencing compliance with all zoning, building and applicable regulations, and an original or certified copy of any other consents, permits, licenses, approvals and franchises referred to in paragraph 5 of this Exhibit G;

     (i) not more than 30 days and not less than 5 days before Closing, (1) original tenant estoppel certificates dated not more than 30 days before Closing from tenant Baylor Health Care System (“Baylor”) and any additional tenants such that the total square footage covered by all received estoppels equals or exceeds at least 75% of the total leased area of the Property, as shown on the attached rent roll, and (2) an original tenant estoppel certificate dated not more than 30 days before Closing for each non-residential lease affecting the Property under which the tenant thereunder leases not less than 20,000 square feet of interior space within the Improvements and an original subordination, non-disturbance and attornment agreement for each non-residential lease affecting the Property under which the tenant thereunder leases not less than 20,000 square feet of interior space within the Improvements and designated by Lender in its sole discretion;

     (j) a certified inventory of Personal Property included in the Property;

     (k) to the extent the Property is composed of one or more separate tax parcels, copies of receipted tax and assessment bills for the current tax year and for the previous tax year for such tax parcels;

     (1) a form of opinion prepared by counsel satisfactory to Lender covering such legal matters as Lender deems reasonably appropriate, including due authorization, due execution, enforceability, usury or choice of law, and due organization and good standing of Borrower, with the original to be signed, dated and delivered to Lender at Closing;

G-2

     (m) year-to-date operating statements for the Property for the fiscal year in which Closing occurs and operating statements for the Property for the prior fiscal year; capital and operating budgets for the Property for the remainder of the fiscal year in which Closing occurs and for the next succeeding fiscal year; and such other financial information covering operations of the Property and the financial condition of Borrower, Borrower’s constituent entities and Applicant as Lender may reasonably request;

     (n) standard UCC, bankruptcy, state and federal tax lien, and pending litigation/judgment searches for (i) Borrower, (ii) Applicant, and (iii) the Property Manager (if affiliated with Borrower or Applicant);

     (o) not less than 5 business days before Closing, ground lessor estoppel and agreements in form and substance reasonably acceptable to Lender from any fee owners of the Property; and

     (p) from time to time before Closing, such other documentation or information as Lender may reasonably request in connection with Closing.

     2. In the event that the terms of any operating agreements, ground leases, reciprocal easement agreements, management agreements and other material agreements affecting the Property entitle Borrower to request an estoppel certificate concerning the status or effectiveness of or compliance with the terms and conditions of any such instrument (individually, an “REA Estoppel Certificate”) and Lender so requests any such REA Estoppel Certificate prior to Closing, Borrower shall use its good faith efforts to obtain any such REA Estoppel Certificate prior to Closing in the form and from the parties prescribed by such instrument (or, in the event no such form is prescribed, in a form reasonably acceptable to Lender).

     3. The leasing requirements set forth in Exhibit D shall have been satisfied.

     4. Borrower shall have executed and delivered to Lender documents satisfactory to Lender (the “Loan Documents”) evidencing and securing the Loan and any other obligations of Borrower set forth in this Agreement, which will include provisions substantially in the form of the following:

     (a) late charges of 5% of any late payment; a default interest rate of 5% per annum over the Fixed Interest Rate; the Evasion of Prepayment Premium described in Exhibit A, payable upon repayment of the Loan after an event of default or upon any other prepayment not permitted by the Loan Documents; and provisions for payment of reasonable fees relating to actions of Lender requested by Borrower under the Loan Documents;

     (b) a 5-day grace period for monetary defaults; and a 30-day grace period after notice for non-monetary defaults which will be extended as necessary for non-monetary defaults not susceptible of cure within 30 days, if Borrower commences to cure within the 30-day period, diligently prosecutes

G-3

the cure to completion and the entire grace period for a non-monetary default does not exceed 120 days;

     (c) conditions to Borrower’s right to enter into leases affecting the Property without Lender’s consent, which conditions are more particularly described in Exhibit B;

     (d) requirements to deliver to Lender quarterly and annual financial statements for the Property (and for annual financial statements for Borrower and Guarantor/Indemnitor upon request) and such other financial information as Lender may reasonably request front time to time. The financial statements (which shall include partial fiscal years) shall be certified by Borrower and may be unaudited, except that following an event of default, the annual financial statements will be audited and accompanied by a satisfactory opinion from a CPA approved by Lender;

     (e) a requirement to deliver to Lender quarterly and annual certifications of the rent roll for the Property, certified by Borrower, verifying information about all leases affecting the Property and verifying Borrower’s compliance with the provisions of the Loan Documents relating to leasing;

     (f) subject to paragraphs 4 (g) and 4 (h) of this Exhibit G, prohibitions on prior or subordinate liens and encumbrances against the Property or any interest in the Property and on certain direct or indirect sales, assignments, pledges or other transfers of the Property or any estate or interest therein without Lender’s prior written consent which may be withheld in Lender’s sole and absolute discretion, it being understood that prohibited transfers include (A) direct or indirect changes (by operation of law or otherwise and including mergers) in the identity or composition of Borrower or a change in control (as defined in Exhibit E) of Borrower and (B) pledges, of stock or of partnership or membership interests, as the case may be, in Borrower, provided that any change in control of Guarantor or Indemnitor shall not constitute a change in control of Borrower while the equity securities of Guarantor or Indemnitor are listed on a public securities exchange or the over-the-counter market;

     (g) a one-time sale of the Property will be permitted, subject to the following conditions: (i) Lender’s approval of the transferee, which must have a net worth of at least $400 million and must be an institutional investor or developer with a reputation and experience comparable to those of Applicant at Closing; (ii) transferee’s express assumption of Borrower’s obligations under the Loan Documents and with respect to the Property; (iii) Lender’s approval in its sole discretion of a substitute guarantor and substitute indemnitor, and delivery of substitute guaranty and indemnity instruments in substantially the forms provided to Lender at Closing; (iv) satisfaction of the conditions set forth in paragraph 4(h) of this Exhibit G; (v) Lender’s receipt of satisfactory evidence that, immediately prior to the transfer and at least 12 months subsequent to the transfer, the Property supports a loan to value ratio no greater than 55%, with value to be determined by the purchase price of the Property pursuant to an executed

G-4

purchase and sale agreement with a bona fide third party purchaser, and a Debt Service Coverage of not less than 1.40x; and (vi) payment of a transfer and assumption fee in the amount of 1% of the outstanding principal balance of the Loan;

     (h) the following conditions under which transfers of the membership interests in Borrower will be permitted, subject to there being no change in control (as defined in Exhibit E) of Borrower or the Property:

     (i) Lender shall have received prior notice;

     (ii) there shall then be no existing default under the Loan Documents and all of Borrower’s payment obligations to Lender shall have been satisfied through the date of transfer;

     (iii) Borrower shall have paid Lender’s costs (including legal fees and expenses) and a processing fee relating to the transfer;

     (iv) the transfer shall not cause an ERISA violation;

     (v) the property manager of the Property shall be satisfactory to Lender;

     (vi) the transferee (including substitute guarantor or indemnitor) shall be domiciled in the United States and/or is a citizen of the United States, shall not be a “specifically designated national and blocked person” on the OFAC List and otherwise shall not be in violation of any Anti-Terrorism Laws, shall not have had adversarial dealings with Lender or had a monetary default under any other investment with Lender, shall not have been found guilty of criminal charges, and shall be free from bankruptcy;

     (vii) prior to the transfer, Borrower shall have provided Lender with a Uniform Commercial Code search report satisfactory to Lender relating to the transferee; and

     (viii) prior to the transfer, Borrower shall have delivered to Lender a certification as to all of the foregoing matters executed by an entity satisfactory to Lender, together with such evidence to confirm the accuracy of such certification as Lender may reasonably request;

     (i) carve-outs from the non-recourse limitation on liability, which are set forth in Exhibit H-6;

     (j) such covenants, warranties, representations and agreements of Borrower, Lender, the administrator of the Deposit Account (defined herein)

G-5

and a depositary institution as are required to satisfy the lock-box requirements set forth in Exhibit H-7; and

     (k) a requirement that any termination fee paid to Borrower in excess of $250,000 in connection with any lease termination shall be paid to Lender and used to reimburse Borrower for tenant improvement costs and leasing commissions associated with the affected leased premises (provided certain conditions are met); provided, however that upon an event of default under the Loan Documents, any and all lease termination fees (regardless of the amount) shall be paid to Lender and used to reimburse Borrower for tenant improvement costs and leasing commissions associated with the affected leased premises.

     5. Borrower’s composition shall continue to be the same as set forth in Exhibit E, and the representations and warranties contained therein shall be true, correct and complete as of the Closing Date.

     6. Lender shall have received evidence satisfactory to Lender that (i) the Property shall be in material compliance with all applicable Law, including those relating to construction, land use, health, safety and environmental matters and (ii) all permits, licenses, approvals and franchises required for the construction, use, operation, occupancy and management of the Property have been obtained and are in good standing and Borrower has complied with any specific conditions or requirements applicable to the Property.

     7. Lender shall have received and approved the following Consultants’ Inspections and Reports relating to the Property:

(a) a current appraisal (the “Appraisal”) prepared by an appraiser (the “Appraiser”) engaged by Lender in accordance with Lender’s scope of work. The Appraisal must support a loan to value ratio not to exceed 55%;

(b) a report (the “Engineering Report”), prepared by an independent engineer (the “Engineering Consultant”) engaged by Lender, in accordance with Lender’s scope of work. Applicant agrees to provide the Engineering Consultant with a copy of any soils investigation report with respect to the Property in Applicant’s possession. The Engineering Report will be based on a physical inspection of the Improvements and review of the final plans and specifications of the Improvements (to the extent they are required to be provided hereunder); and

(c) Environmental assessment and compliance reports (the “Environmental and Compliance Report”) prepared by an independent expert (the “Environmental Consultant”) engaged by Lender in accordance with Lender’s scope of work.

Applicant will cooperate and use reasonable efforts to cause its tenants, its property manager and other third parties with an interest in or information

G-6

about the Property to cooperate with the consultants in their investigations. Lender agrees to provide Borrower with copies of the Consultants’ Inspections and Reports within 10 days after Closing. Neither Lender nor any of the consultants will have any liability or responsibility to Borrower with respect to the Consultants’ Inspections and Reports.

     8. Borrower and all of Borrower’s members shall be (i) free from bankruptcy and (ii) solvent, as determined by Lender in its sole discretion, both in that the value of their respective assets exceeds their respective liabilities and that it is likely that they will be able to pay their debts, including, where applicable, payments required by the Loan Documents, as they become due in the foreseeable future.

     9. Lender shall have approved all legal matters.

Notwithstanding the requirements of this Exhibit G for the delivery of information and other materials, Applicant and Borrower may satisfy their delivery obligations under this Exhibit G for all or part of the information and other materials to be delivered by providing Lender with the addresses of one or more Internet web sites at which such information and other materials may be accessed by Lender.

G-7

EX. H
ADDITIONAL PROVISIONS

EXHIBIT H

ADDITIONAL PROVISIONS

The attached Exhibits H-1 through H-10 constitute the additional provisions applicable to the Loan.

Index

1.	Extension Terms	H-l
2.	Correspondent Authority and Fee Arrangement	H-2
3.	Cross Collateralization	H-3
4 .	Ground Lease Terms	H-4
5.	Insurance Proceeds and Condemnation Awards for Restoration — Conditions to Use	H-5
6.	Limitation of Liability	H-6
7	Mortgage/Deed of Trust Provisions	H-6A
8	Lock-Box Requirements	H-7
9.	Allocated Loan Amounts	H-8
10.	Release Provisions — Partial Release	H-9
11.	Substitution of Collateral	H-10

H-1

EX. H-1
LOAN EXTENSION PROVISIONS

EXHIBIT H — 1

EXTENSION TERMS

      First Extension: At any time between the 78^th and 83^rd month of the Initial Term and provided (i) no event of default exists under the Loan, (ii) the Debt Service Coverage at the Property is at least 1.40x, (iii) the loan to value ratio is not greater than 55%, and (iv) Borrower pays an extension fee in the amount of .50% of the then-current outstanding principal amount of the Loan, Borrower will have the option to extend the Initial Term for an additional 12-month extension term (the “First Extension”), subject to the following: the First Extension will on a floating rate basis, priced at 400 basis points over the 1-month LIBOR rate with a minimum coupon of 7.25% and will be amortized on a 30-year schedule.

     Second Extension: At any time between the 10^th and 11^th month of the First Extension and provided (i) no event of default exists under the Loan, (ii) the Debt Service Coverage at the Property is at least 1.40x, (iii) the loan to value ratio is not greater than 55%, and (iv) Borrower pays an extension fee in the amount of .50% of the then-current outstanding principal amount of the Loan, Borrower will have the option to extend the then-existing Term for an additional 12-month extension term (the “Second Extension”) on the same terms and conditions as the First Extension.

     Prepayment during either the First Extension or the Second Extension will be subject to the provisions of Section 1(f) and Exhibit A.

     In the event the Term is extended for either the First Extension or the Second Extension, Lender will require Borrower to purchase an interest rate cap from a “AA” rated counterparty and in a form reasonably acceptable to Lender. The interest rate cap will be required at the first day of each extension and shall cover the ensuing 12 months of such extension. The interest rate cap shall be at a rate that will provide for a minimum 1.40x Debt Service Coverage at the Property and such interest rate cap shall be assigned to Lender. The LIBOR rate cap required shall be calculated by Lender based on the lower of actual Net Operating Income of the Property for the preceding 12-month period and budgeted Net Operating Income for the ensuing 12-month period.

H-1-1

EX. H-2
CORRESPONDENT

EXHIBIT H — 2

CORRESPONDENT AUTHORITY AND FEE ARRANGEMENT

     Lender has retained Holliday Fenoglio Fowler, L.P. (the “Correspondent”) to originate and obtain applications for mortgage loans for consideration by Lender. Correspondent has been retained solely as an independent contractor and will not be considered or construed under any circumstances to be an agent of Lender. Applicant understands and agrees that Correspondent has no authority to accept or execute this Agreement on behalf of Lender and that all representations, documents and understandings between Applicant and Correspondent with respect to Applicant’s offer for Borrower to borrow are merged into this Agreement. Separate and apart from this Agreement, Applicant and Correspondent have entered into an agreement that provides for Applicant to pay to Correspondent a brokerage fee or commission in connection with the Loan and, notwithstanding the merger provision contained in the preceding sentence, such agreement is not merged into this Agreement.

     Applicant further acknowledges and agrees that Lender may have a separate compensation arrangement with Correspondent pursuant to which payments may be made by Lender to Correspondent or other compensation earned by Correspondent based on various factors. Such factors may, among other things, include the volume of new loan originations done by Correspondent with Lender (which may include the Loan or other loans made by Lender to other borrowers), the amount of loans serviced by Correspondent for Lender (which may include servicing of the Loan as well as other loans made by Lender to other borrowers), the scope of services and duties performed as part of the servicing performed by Correspondent over the Term, or the existence of a sub-servicing arrangement in connection with the Loan. Such compensation paid by Lender to Correspondent will be in addition to any fees paid to Correspondent by Applicant or Borrower.

H-2-1

EX. H-3
CROSS COLLATERALIZATION

EXHIBIT H — 3

CROSS COLLATERALIZATION

     The Loan Documents will contain cross-collateralization, cross-prepayment and cross-default provisions satisfactory to Lender, subject to the terms of and limitations imposed by the ground leases described in Exhibit H-4. Lender may, at Lender’s option, determine that multiple notes, guarantees and/or mortgages are required to document the Loan, and Borrower will execute such notes, guarantees and mortgages. The Loan Documents will provide that if an event of default occurs under any one of the notes and/or guarantees or under any one of the mortgages securing the notes and/or guarantees or under any of the other Loan Documents, such event of default will also constitute an event of default under the other notes and/or guarantees and mortgages and Lender will be entitled to exercise its remedies under all of the notes and/or guarantees, mortgages and other Loan Documents, including to foreclose upon all of the properties comprising the Property.

H-3-1

EX. H-4
GROUND LEASE TERMS

EXHIBIT H — 4

GROUND LEASE TERMS

Ground Leases:

     Certain provisions of the ground leases that currently govern the terms of the leasehold interests comprising part of the Property are set forth in the schedule attached to this Exhibit H-4.

Ground Lessor Agreements with Lender:

     As a condition to Closing, Borrower will deliver to Lender a document in recordable form executed by each ground lessor and reasonably satisfactory to Lender which confirms, among other things, (a) that Lender shall have the right to receive copies of all notices of default sent under the ground lease and shall have the opportunity to cure said defaults (including an additional cure period in the event ground lessee fails to cure any default which gives rise to a right to terminate the ground lease), (b) that such ground lessor will enter into a new ground lease or leases with Lender if the ground lease with such ground lessor is terminated at any time during the term thereof for any reason, including rejection of such ground lease in a bankruptcy proceeding, and/or (c) that Lender shall have the right of prior review and approval of any amendment, cancellation or termination of the ground lease provided that such separate document shall not be required in the event the ground lease expressly extends and provides such rights to Lender.

H-4-1

GROUND LEASE SCHEDULE

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:  Ground Lease Agreement between Baylor Health Care System (the “Landlord”) and HRT Properties of Texas, Ltd. (the “Tenant”), dated July 30, 2004, as amended by Omnibus Amendment Agreement by and between, among other parties, Landlord and Tenant, dated July 15, 2008 (as amended, the Lease”)

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	Landry Tower
Expiration Date	December 31, 2059
Renewals	Two ten-year Renewal Options
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	•   Tenant owns Improvements, subject to reversionary interest of Landlord.
	•   Premises do not include air rights.
Transfer of Leasehold Interest	•   To the extent provided in the Lease, Affiliate Transfers, Subleases and Leasehold Mortgages are permitted and not subject to the separate restrictions on a Transfer.
	•   During the Acceptable Transferee Requirement Period, any Transfer must be to an Acceptable Transferee.
	•   Any Transfer must be to a Qualified Transferee.
	•   No Transfer may be to a Person (or any of its Affiliates) that provides or manages clinical health care services that compete with Baylor Health Care System.
	•   A Change in Control:
	(1)   Is not deemed to be a Transfer;
	(2)   Must not result in Tenant or any Affiliate becoming a Disqualified Person;
	(3)   That occurs during the Acceptable Transferee Requirement Period must include all Affiliates of Tenant which own any portion of the Portfolio;
	(4)   That occurs after the Acceptable Transferee Requirement Period must include all Affiliates of Tenant which own any portion of the Other Campus

H-4-2

Lease Provision	Summary
	Ground Leased Property; and
	(5)   That occurs within five years from the Effective Date triggers Landlord’s right to repurchase all improvements in the Portfolio and otherwise subject to ground leases with Landlord or any of its Affiliates.
	•   Any Transfer must include Tenant’s entire interest in the Premises, the Improvements and the Other Campus Ground Leased Property.
	•   Landlord has Right of First Offer prior to Tenant’s solicitation of offers for the purchase/sale of the Premises.
	•   Landlord has Right of First Refusal prior to Tenant’s acceptance of an offer to purchase the Premises.
	•   Transferee’s use of Premises must be consistent with permitted use under the Lease, and Transferee must expressly assume Lease in writing.
Summary of Rights of Mortgagee	•   Landlord consent is not required for a Leasehold Mortgage, but condition precedent to Leasehold Mortgage is execution of tri-party agreement among Landlord, Tenant and mortgagee providing Landlord right to purchase the loan for total amount owing.
	•   A Leasehold Mortgage may not encumber property other than the Campus Portfolio.
	•   A Leasehold Mortgage must pertain to the entire Campus Portfolio and Tenant shall not enter into a Leasehold Mortgage for less than the entire Campus Portfolio.
	•   A Leasehold Mortgagee that is an Institutional Lender is not required to be approved by Landlord.
	•   No Leasehold Mortgage may be cross-defaulted with other indebtedness of Tenant that is not secured by the Leasehold Mortgage.
	•   Leasehold Mortgagee has right to notice from Landlord of any default by Tenant under the Lease after providing its address for notice to Landlord.
	•   Leasehold Mortgage shall expressly provide that all notices of default thereunder served on Tenant must be delivered concurrently to Landlord.
	•   Landlord may not terminate the Lease based on a Tenant default if the Leasehold Mortgagee cures the default within 30 days following Landlord’s notice that it intends to terminate the Lease (or such longer period as required, as long as default is not curable by payment or expenditure of money and cure is commenced within such 30 day period and diligently pursued).
	•   If Tenant declares bankruptcy and Leasehold Mortgagee is thereby precluded from pursuing foreclosure or transfer in lieu of foreclosure, Leasehold Mortgagee’s cure period is extended as reasonably required so long as Leasehold Mortgagee uses reasonable and diligent efforts to obtain release of the

H-4-3

Lease Provision	Summary
	Premises from bankruptcy proceedings.
	•   No voluntary cancellation, termination, surrender, amendment or modification of the Lease by Tenant is binding on Leasehold Mortgagee without Leasehold Mortgagee’s consent.
	•   Leasehold Mortgagee is not liable for Tenant’s obligations under the Lease until the Leasehold Mortgagee acquires Tenant’s rights by foreclosure or transfer in lieu thereof. After acquiring Tenant’s interest in the Lease, the Leasehold Mortgagee is only liable for the obligations of Tenant until the Leasehold Mortgagee transfers or assigns the leasehold interest as permitted by the Lease.
	•   If Tenant declares bankruptcy and rejects the Lease, Leasehold Mortgagee may require that Landlord (a) enter into a new lease with Leasehold Mortgagee and (b) convey all Improvements to Leasehold Mortgagee.
	•   Landlord shall execute upon request from Tenant an agreement confirming the agreements of Landlord in the Lease made for the benefit of Leasehold Mortgagee and containing such other terms and provisions as Leasehold Mortgagee may reasonably request that are consistent with the terms of the Lease.
	•   Within 30 days of request. Landlord will certify to the best of its knowledge (a) that the Lease is unmodified except as stated and in full force and effect, (b) dates to which payments have been made, (c) that no notice of default received by Landlord that has not been cured except as stated and (d) that Tenant is not in default.
Attornment	If any lender succeeds to Landlord’s rights, Tenant will attorn to such successor, and will execute any instrument necessary to confirm such attornment.

H-4-4

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:  Ground Lease Agreement between Baylor Health Care System (the “Landlord”) and HRT Properties of Texas, Ltd. (the “Tenant”), dated July 30, 2004, as amended by Omnibus Amendment Agreement by and between, among other parties, Landlord and Tenant, dated July 15, 2008 (as amended, the Lease”)

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	Wadley and Barnett Towers, Dallas Texas
Expiration Date	December 31, 2059
Renewals	Two ten-year Renewal Options
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	•   Tenant owns Improvements, subject to reversionary interest of Landlord.
	•   Premises do not include air rights.
Transfer of Leasehold Interest	•   To the extent provided in the Lease, Affiliate Transfers, Subleases and Leasehold Mortgages are permitted and not subject to the separate restrictions on a Transfer.
	•   During the Acceptable Transferee Requirement Period, any Transfer must be to an Acceptable Transferee.
	•   Any Transfer must be to a Qualified Transferee.
	•   No Transfer may be to a Person (or any of its Affiliates) that provides or manages clinical health care services that compete with Baylor Health Care System.
	•   A Change in Control:
	(1)   Is not deemed to be a Transfer;
	(2)   Must not result in Tenant or any Affiliate becoming a Disqualified Person;
	(3)   That occurs during the Acceptable Transferee Requirement Period must include all Affiliates of Tenant which own any portion of the Portfolio;
	(4)   That occurs after the Acceptable Transferee Requirement Period must include all Affiliates of Tenant which own any portion of the Other Campus Ground Leased Property; and
	(5)   That occurs within five years from the Effective Date

H-4-5

Lease Provision	Summary
	triggers Landlord’s right to repurchase all improvements in the Portfolio and otherwise subject to ground leases with Landlord or any of its Affiliates.
	•   Any Transfer must include Tenant’s entire interest in the Premises, the Improvements and the Other Campus Ground Leased Property.
	•   Landlord has Right of First Offer prior to Tenant’s solicitation of offers for the purchase/sale of the Premises.
	•   Landlord has Right of First Refusal prior to Tenant’s acceptance of an offer to purchase the Premises.
	•   Transferee’s use of Premises must be consistent with permitted use under the Lease, and Transferee must expressly assume Lease in writing.
Summary of Rights of Mortgagee	•   Landlord consent is not required for a Leasehold Mortgage, but condition precedent to Leasehold Mortgage is execution of tri-party agreement among Landlord, Tenant and mortgagee providing Landlord right to purchase the loan for total amount owing.
	•   A Leasehold Mortgage may not encumber property other than the Campus Portfolio.
	•   A Leasehold Mortgage must pertain to the entire Campus Portfolio and Tenant shall not enter into a Leasehold Mortgage for less than the entire Campus Portfolio.
	•   A Leasehold Mortgagee that is an Institutional Lender is not required to be approved by Landlord.
	•   No Leasehold Mortgage may be cross-defaulted with other indebtedness of Tenant that is not secured by the Leasehold Mortgage.
	•   Leasehold Mortgagee has right to notice from Landlord of any default by Tenant under the Lease after providing its address for notice to Landlord.
	•   Leasehold Mortgage shall expressly provide that all notices of default thereunder served on Tenant must be delivered concurrently to Landlord.
	•   Landlord may not terminate the Lease based on a Tenant default if the Leasehold Mortgagee cures the default within 30 days following Landlord’s notice that it intends to terminate the Lease (or such longer period as required, as long as default is not curable by payment or expenditure of money and cure is commenced within such 30 day period and diligently pursued).
	•   If Tenant declares bankruptcy and Leasehold Mortgagee is thereby precluded from pursuing foreclosure or transfer in lieu of foreclosure, Leasehold Mortgagee’s cure period is extended as reasonably required so long as Leasehold Mortgagee uses reasonable and diligent efforts to obtain release of the Premises from bankruptcy proceedings.
	•   No voluntary cancellation, termination, surrender, amendment

H-4-6

Lease Provision	Summary
	or modification of the Lease by Tenant is binding on Leasehold Mortgagee without Leasehold Mortgagee’s consent.
	•   Leasehold Mortgagee is not liable for Tenant’s obligations under the Lease until the Leasehold Mortgagee acquires Tenant’s rights by foreclosure or transfer in lieu thereof. After acquiring Tenant’s interest in the Lease, the Leasehold Mortgagee is only liable for the obligations of Tenant until the Leasehold Mortgagee transfers or assigns the leasehold interest as permitted by the Lease.
	•   If Tenant declares bankruptcy and rejects the Lease, Leasehold Mortgagee may require that Landlord (a) enter into a new lease with Leasehold Mortgagee and (b) convey all Improvements to Leasehold Mortgagee.
	•   Landlord shall execute upon request from Tenant an agreement confirming the agreements of Landlord in the Lease made for the benefit of Leasehold Mortgagee and containing such other terms and provisions as Leasehold Mortgagee may reasonably request that are consistent with the terms of the Lease.
	•   Within 30 days of request. Landlord will certify to the best of its knowledge (a) that the Lease is unmodified except as stated and in full force and effect, (b) dates to which payments have been made, (c) that no notice of default received by Landlord that has not been cured except as stated and (d) that Tenant is not in default.
Attornment	If any lender succeeds to Landlord’s rights, Tenant will attorn to such successor, and will execute any instrument necessary to confirm such attornment.

H-4-7

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:  Ground Lease Agreement between Baylor University Medical Center (the “Landlord”) and HRT Properties of Texas, Ltd. (the “Tenant”), dated July 30, 2004, as amended by Omnibus Amendment Agreement by and between, among other parties, Landlord and Tenant, dated July 15, 2008 (as amended, the Lease”)

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	Sammons Tower, Dallas, Texas
Expiration Date	December 31, 2059
Renewals	Two ten-year Renewal Options
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	•   Tenant owns Improvements, subject to reversionary interest of Landlord.
	•   Premises do not include air rights.
Transfer of Leasehold Interest	•   To the extent provided in the Lease, Affiliate Transfers, Subleases and Leasehold Mortgages are permitted and not subject to the separate restrictions on a Transfer.
	•   During the Acceptable Transferee Requirement Period, any Transfer must be to an Acceptable Transferee.
	•   Any Transfer must be to a Qualified Transferee.
	•   No Transfer may be to a Person (or any of its Affiliates) that provides or manages clinical health care services that compete with Baylor Health Care System.
	•   A Change in Control:
	(1)   Is not deemed to be a Transfer;
	(2)   Must not result in Tenant or any Affiliate becoming a Disqualified Person;
	(3)   That occurs during the Acceptable Transferee Requirement Period must include all Affiliates of Tenant which own any portion of the Portfolio;
	(4)   That occurs after the Acceptable Transferee Requirement Period must include all Affiliates of Tenant which own any portion of the Other Campus Ground Leased Property; and
	(5)   That occurs within five years from the Effective Date

H-4-8

Lease Provision	Summary
	triggers Landlord’s right to repurchase all improvements in the Portfolio and otherwise subject to ground leases with Landlord or any of its Affiliates.
	•   Any Transfer must include Tenant’s entire interest in the Premises, the Improvements and the Other Campus Ground Leased Property.
	•   Landlord has Right of First Offer prior to Tenant’s solicitation of offers for the purchase/sale of the Premises.
	•   Landlord has Right of First Refusal prior to Tenant’s acceptance of an offer to purchase the Premises.
	•   Transferee’s use of Premises must be consistent with permitted use under the Lease, and Transferee must expressly assume Lease in writing.
Summary of Rights of Mortgagee	•   Landlord consent is not required for a Leasehold Mortgage, but condition precedent to Leasehold Mortgage is execution of tri-party agreement among Landlord, Tenant and mortgagee providing Landlord right to purchase the loan for total amount owing.
	•   A Leasehold Mortgage may not encumber property other than the Campus Portfolio.
	•   A Leasehold Mortgage must pertain to the entire Campus Portfolio and Tenant shall not enter into a Leasehold Mortgage for less than the entire Campus Portfolio.
	•   A Leasehold Mortgagee that is an Institutional Lender is not required to be approved by Landlord.
	•   No Leasehold Mortgage may be cross-defaulted with other indebtedness of Tenant that is not secured by the Leasehold Mortgage.
	•   Leasehold Mortgagee has right to notice from Landlord of any default by Tenant under the Lease after providing its address for notice to Landlord.
	•   Leasehold Mortgage shall expressly provide that all notices of default thereunder served on Tenant must be delivered concurrently to Landlord.
	•   Landlord may not terminate the Lease based on a Tenant default if the Leasehold Mortgagee cures the default within 30 days following Landlord’s notice that it intends to terminate the Lease (or such longer period as required, as long as default is not curable by payment or expenditure of money and cure is commenced within such 30 day period and diligently pursued).
	•   If Tenant declares bankruptcy and Leasehold Mortgagee is thereby precluded from pursuing foreclosure or transfer in lieu of foreclosure, Leasehold Mortgagee’s cure period is extended as reasonably required so long as Leasehold Mortgagee uses reasonable and diligent efforts to obtain release of the Premises from bankruptcy proceedings.
	•   No voluntary cancellation, termination, surrender, amendment

H-4-9

Lease Provision	Summary
	or modification of the Lease by Tenant is binding on Leasehold Mortgagee without Leasehold Mortgagee’s consent.
	•   Leasehold Mortgagee is not liable for Tenant’s obligations under the Lease until the Leasehold Mortgagee acquires Tenant’s rights by foreclosure or transfer in lieu thereof. After acquiring Tenant’s interest in the Lease, the Leasehold Mortgagee is only liable for the obligations of Tenant until the Leasehold Mortgagee transfers or assigns the leasehold interest as permitted by the Lease.
	•   If Tenant declares bankruptcy and rejects the Lease, Leasehold Mortgagee may require that Landlord (a) enter into a new lease with Leasehold Mortgagee and (b) convey all Improvements to Leasehold Mortgagee.
	•   Landlord shall execute upon request from Tenant an agreement confirming the agreements of Landlord in the Lease made for the benefit of Leasehold Mortgagee and containing such other terms and provisions as Leasehold Mortgagee may reasonably request that are consistent with the terms of the Lease.
	•   Within 30 days of request, Landlord will certify to the best of its knowledge (a) that the Lease is unmodified except as stated and in full force and effect, (b) dates to which payments have been made, (c) that no notice of default received by Landlord that has not been cured except as stated and (d) that Tenant is not in default.
Attornment	If any lender succeeds to Landlord’s rights, Tenant will attorn to such successor, and will execute any instrument necessary to confirm such attornment.

H-4-10

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:  Ground Lease Agreement between Baylor Health Care System (the “Landlord”) and HRT Properties of Texas, Ltd. (the “Tenant”), dated July 30, 2004, as amended by Omnibus Amendment Agreement by and between, among other parties, Landlord and Tenant, dated July 15, 2008 (as amended, the Lease”)

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	Baylor Geriatrics Center, Dallas, Texas
Expiration Date	December 31, 2059
Renewals	Two ten-year Renewal Options
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	•   Tenant owns Improvements, subject to reversionary interest of Landlord.
	•   Premises do not include air rights.
Transfer of Leasehold Interest	•   To the extent provided in the Lease, Affiliate Transfers, Subleases and Leasehold Mortgages are permitted and not subject to the separate restrictions on a Transfer.
	•   During the Acceptable Transferee Requirement Period, any Transfer must be to an Acceptable Transferee.
	•   Any Transfer must be to a Qualified Transferee.
	•   No Transfer may be to a Person (or any of its Affiliates) that provides or manages clinical health care services that compete with Baylor Health Care System.
	•   A Change in Control:
	(1)   Is not deemed to be a Transfer;
	(2)   Must not result in Tenant or any Affiliate becoming a Disqualified Person;
	(3)   That occurs during the Acceptable Transferee Requirement Period must include all Affiliates of Tenant which own any portion of the Portfolio;
	(4)   That occurs after the Acceptable Transferee Requirement Period must include all Affiliates of Tenant which own any portion of the Other Campus Ground Leased Property; and
	(5)   That occurs within five years from the Effective Date

H-4-11

Lease Provision	Summary
	triggers Landlord’s right to repurchase all improvements in the Portfolio and otherwise subject to ground leases with Landlord or any of its Affiliates.
	•   Any Transfer must include Tenant’s entire interest in the Premises, the Improvements and the Other Campus Ground Leased Property.
	•   Landlord has Right of First Offer prior to Tenant’s solicitation of offers for the purchase/sale of the Premises.
	•   Landlord has Right of First Refusal prior to Tenant’s acceptance of an offer to purchase the Premises.
	•   Transferee’s use of Premises must be consistent with permitted use under the Lease, and Transferee must expressly assume Lease in writing.
Summary of Rights of Mortgagee	•   Landlord consent is not required for a Leasehold Mortgage, but condition precedent to Leasehold Mortgage is execution of tri-party agreement among Landlord, Tenant and mortgagee providing Landlord right to purchase the loan for total amount owing.
	•   A Leasehold Mortgage may not encumber property other than the Campus Portfolio.
	•   A Leasehold Mortgage must pertain to the entire Campus Portfolio and Tenant shall not enter into a Leasehold Mortgage for less than the entire Campus Portfolio.
	•   A Leasehold Mortgagee that is an Institutional Lender is not required to be approved by Landlord.
	•   No Leasehold Mortgage may be cross-defaulted with other indebtedness of Tenant that is not secured by the Leasehold Mortgage.
	•   Leasehold Mortgagee has right to notice from Landlord of any default by Tenant under the Lease after providing its address for notice to Landlord.
	•   Leasehold Mortgage shall expressly provide that all notices of default thereunder served on Tenant must be delivered concurrently to Landlord.
	•   Landlord may not terminate the Lease based on a Tenant default if the Leasehold Mortgagee cures the default within 30 days following Landlord’s notice that it intends to terminate the Lease (or such longer period as required, as long as default is not curable by payment or expenditure of money and cure is commenced within such 30 day period and diligently pursued).
	•   If Tenant declares bankruptcy and Leasehold Mortgagee is thereby precluded from pursuing foreclosure or transfer in lieu of foreclosure, Leasehold Mortgagee’s cure period is extended as reasonably required so long as Leasehold Mortgagee uses reasonable and diligent efforts to obtain release of the Premises from bankruptcy proceedings.
	•   No voluntary cancellation, termination, surrender, amendment

H-4-12

Lease Provision	Summary
	or modification of the Lease by Tenant is binding on Leasehold Mortgagee without Leasehold Mortgagee’s consent.
	•   Leasehold Mortgagee is not liable for Tenant’s obligations under the Lease until the Leasehold Mortgagee acquires Tenant’s rights by foreclosure or transfer in lieu thereof. After acquiring Tenant’s interest in the Lease, the Leasehold Mortgagee is only liable for the obligations of Tenant until the Leasehold Mortgagee transfers or assigns the leasehold interest as permitted by the Lease.
	•   If Tenant declares bankruptcy and rejects the Lease, Leasehold Mortgagee may require that Landlord (a) enter into a new lease with Leasehold Mortgagee and (b) convey all Improvements to Leasehold Mortgagee.
	•   Landlord shall execute upon request from Tenant an agreement confirming the agreements of Landlord in the Lease made for the benefit of Leasehold Mortgagee and containing such other terms and provisions as Leasehold Mortgagee may reasonably request that are consistent with the terms of the Lease.
	•   Within 30 days of request, Landlord will certify to the best of its knowledge (a) that the Lease is unmodified except as stated and in full force and effect, (b) dates to which payments have been made, (c) that no notice of default received by Landlord that has not been cured except as stated and (d) that Tenant is not in default.
Attornment	If any lender succeeds to Landlord’s rights, Tenant will attorn to such successor, and will execute any instrument necessary to confirm such attornment.

H-4-13

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:  Ground Lease Agreement between Baylor Health Care System (the “Landlord”) and HRT Properties of Texas, Ltd. (the “Tenant”), dated July 30, 2004, as amended by Omnibus Amendment Agreement by and between, among other parties, Landlord and Tenant, dated July 15, 2008 (as amended, the Lease”)

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	Surgicare Building, Dallas, Texas
Expiration Date	December 31, 2059
Renewals	Two ten-year Renewal Options
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	•   Tenant owns Improvements, subject to reversionary interest of Landlord.
	•   Premises do not include air rights.
Transfer of Leasehold Interest	•   To the extent provided in the Lease, Affiliate Transfers, Subleases and Leasehold Mortgages are permitted and not subject to the separate restrictions on a Transfer.
	•   During the Acceptable Transferee Requirement Period, any Transfer must be to an Acceptable Transferee.
	•   Any Transfer must be to a Qualified Transferee.
	•   No Transfer may be to a Person (or any of its Affiliates) that provides or manages clinical health care services that compete with Baylor Health Care System.
	•   A Change in Control:
	(1)   Is not deemed to be a Transfer;
	(2)   Must not result in Tenant or any Affiliate becoming a Disqualified Person;
	(3)   That occurs during the Acceptable Transferee Requirement Period must include all Affiliates of Tenant which own any portion of the Portfolio;
	(4)   That occurs after the Acceptable Transferee Requirement Period must include all Affiliates of Tenant which own any portion of the Other Campus Ground Leased Property; and
	(5)   That occurs within five years from the Effective Date

H-4-14

Lease Provision	Summary
	triggers Landlord’s right to repurchase all improvements in the Portfolio and otherwise subject to ground leases with Landlord or any of its Affiliates.
	•   Any Transfer must include Tenant’s entire interest in the Premises, the Improvements and the Other Campus Ground Leased Property.
	•   Landlord has Right of First Offer prior to Tenant’s solicitation of offers for the purchase/sale of the Premises.
	•   Landlord has Right of First Refusal prior to Tenant’s acceptance of an offer to purchase the Premises.
	•   Transferee’s use of Premises must be consistent with permitted use under the Lease, and Transferee must expressly assume Lease in writing.
Summary of Rights of Mortgagee	•   Landlord consent is not required for a Leasehold Mortgage, but condition precedent to Leasehold Mortgage is execution of tri-party agreement among Landlord, Tenant and mortgagee providing Landlord right to purchase the loan for total amount owing.
	•   A Leasehold Mortgage may not encumber property other than the Campus Portfolio.
	•   A Leasehold Mortgage must pertain to the entire Campus Portfolio and Tenant shall not enter into a Leasehold Mortgage for less than the entire Campus Portfolio.
	•   A Leasehold Mortgagee that is an Institutional Lender is not required to be approved by Landlord.
	•   No Leasehold Mortgage may be cross-defaulted with other indebtedness of Tenant that is not secured by the Leasehold Mortgage.
	•   Leasehold Mortgagee has right to notice from Landlord of any default by Tenant under the Lease after providing its address for notice to Landlord.
	•   Leasehold Mortgage shall expressly provide that all notices of default thereunder served on Tenant must be delivered concurrently to Landlord.
	•   Landlord may not terminate the Lease based on a Tenant default if the Leasehold Mortgagee cures the default within 30 days following Landlord’s notice that it intends to terminate the Lease (or such longer period as required, as long as default is not curable by payment or expenditure of money and cure is commenced within such 30 day period and diligently pursued).
	•   If Tenant declares bankruptcy and Leasehold Mortgagee is thereby precluded from pursuing foreclosure or transfer in lieu of foreclosure, Leasehold Mortgagee’s cure period is extended as reasonably required so long as Leasehold Mortgagee uses reasonable and diligent efforts to obtain release of the Premises from bankruptcy proceedings.
	•   No voluntary cancellation, termination, surrender, amendment

H-4-15

Lease Provision	Summary
	or modification of the Lease by Tenant is binding on Leasehold Mortgagee without Leasehold Mortgagee’s consent.
	•   Leasehold Mortgagee is not liable for Tenant’s obligations under the Lease until the Leasehold Mortgagee acquires Tenant’s rights by foreclosure or transfer in lieu thereof. After acquiring Tenant’s interest in the Lease, the Leasehold Mortgagee is only liable for the obligations of Tenant until the Leasehold Mortgagee transfers or assigns the leasehold interest as permitted by the Lease.
	•   If Tenant declares bankruptcy and rejects the Lease, Leasehold Mortgagee may require that Landlord (a) enter into a new lease with Leasehold Mortgagee and (b) convey all Improvements to Leasehold Mortgagee.
	•   Landlord shall execute upon request from Tenant an agreement confirming the agreements of Landlord in the Lease made for the benefit of Leasehold Mortgagee and containing such other terms and provisions as Leasehold Mortgagee may reasonably request that are consistent with the terms of the Lease.
	•   Within 30 days of request, Landlord will certify to the best of its knowledge (a) that the Lease is unmodified except as stated and in full force and effect, (b) dates to which payments have been made, (c) that no notice of default received by Landlord that has not been cured except as stated and (d) that Tenant is not in default.
Attornment	If any lender succeeds to Landlord’s rights, Tenant will attorn to such successor, and will execute any instrument necessary to confirm such attornment.

H-4-16

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease: Ground Lease Agreement between Baylor Medical Center at Plano (the “Landlord”) and HRT Properties of Texas, Ltd. (the “Tenant”), dated March 31, 2003, as amended by First Amendment to Ground Lease, dated April 30, 2003, as amended by Second Amendment to Ground Lease, dated May 7, 2003, as amended by Third Amendment to Ground Lease, dated May 16, 2003, as amended by Fourth Amendment to Ground Lease, dated May 22, 2003, as amended by Fifth Amendment to Ground Lease, dated January 28, 2004, as amended by Sixth Amendment to Ground Lease, dated July 30, 2004, as amended by Seventh Amendment to Ground Lease, dated November 30, 2007, as amended by Omnibus Amendment Agreement by and between, among other parties, Landlord and Tenant, dated July 15, 2008 (as amended, the Lease”)

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	Baylor Pavilion I, Plano, Texas
Expiration Date	September 30, 2054
Renewals	Two ten-year Renewal Options
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	Tenant owns Improvements, subject to reversionary interest of Landlord.
Transfer of Leasehold Interest	•     Tenant may enter into leases with tenants of the Building.
	•      Tenant may lease, sublease, assign, sell, mortgage, encumber and otherwise transfer its interest in the Lease to Healthcare Realty Trust, or to any entity which is owned or controlled by Healthcare Realty Trust.
	•     Tenant may lease, sublease, assign, sell, mortgage, encumber and otherwise transfer its interest in the Lease, the Premises and the Building, in whole but not in part, to a Qualified Transferee.
	•     Tenant may not otherwise assign, sublease, donate, sell or otherwise transfer rights in Lease without prior written consent of Landlord.
Summary of Rights of Mortgagee	•     Tenant has right to grant a mortgage lien without Landlord’s consent, but the mortgage will be subject to the Lease and

H-4-17

Lease Provision	Summary
	subordinate to the rights of Landlord. If Landlord is provided with a copy of the recorded mortgage within 30 days and given the mortgagee’s contact information, Landlord agrees to the following terms:
	(a)     There will be no cancellation, surrender or modification of the Lease by agreement of Landlord and Tenant without the prior written consent of Mortgagee.
	(b)     Landlord will simultaneously serve Tenant and Mortgagee with notice of default. Mortgagee shall have same time period to cure, and Landlord shall accept performance from Mortgagee.
	(c)     Landlord shall not terminate the Lease or Tenant’s right to possession by reason of Tenant’s default if Mortgagee shall:
	(1)     Cure the default within 30 days after Landlord’s written notice, provided that if the same cannot be cured by payment of Rent within such 30-day period, Mortgagee shall have additional time so long as Mortgagee is proceeding to cure with reasonable diligence; or
	(2)     On or before the expiration of such 30-day period or such additional time, as applicable, agree to perform the covenants of Tenant in writing, to the extent they are capable of being performed by Mortgagee. In the event of such agreement or if the default is not curable by Mortgagee, the default shall be deemed cured and the Lease shall not terminate if Mortgagee proceeds to foreclose and performs during foreclosure proceedings all obligations of Tenant capable of performance by Mortgagee, provided (A) if the foreclosure is subject to the leave of any court and Mortgagee attempts to obtain such leave in a timely and diligent manner but is unsuccessful, the default shall be deemed cured and (B) Mortgagee is not required to continue foreclosure if the default prompting notice is cured. The obligations of Mortgagee terminate upon the sale, assignment or transfer by Mortgagee to any transferee that assumes the obligations of Tenant.
	(d)     As long as there is a Mortgagee, the bankruptcy of Tenant shall not permit Landlord to terminate the Lease as long as the Rent and other charges are being paid.
	(e)     While proceeding with foreclosure, Mortgagee may take possession of and lease the Premises and, upon foreclosure, Mortgagee (but not any party to whom the Lease is sold, transferred or assigned) may without further consent of Landlord sell, transfer or assign the leasehold estate or sublet the Premises to the extent Tenant is permitted to do so under the Lease. Any party acquiring the leasehold estate, as a condition precedent to its enjoyment, must

H-4-18

Lease Provision	Summary
	assume in writing the liability for payment of accrued Rent and the performance of all other obligations from the date of acquisition. Upon such assumption, the assignor shall be released from the performance of unaccrued obligations. Mortgagee must furnish a copy of the instrument of assignment or transfer. If title is taken by Mortgagee in lieu of foreclosure, title may be granted to subsidiary or affiliate of Mortgagee, which shall have same rights as Mortgagee under Lease.
	(f)     If Landlord terminates the Lease, it shall provide written notice to the Mortgagee holding a first lien. Provided that all payments due under the Lease are current and Mortgagee performs the unperformed obligations of Tenant, Mortgagee has 30 days to demand a new lease under the same terms and conditions as the Lease. Termination by Landlord is not effective as to Mortgagee until the end of such 30-day period. During such 30-day period, Landlord may not cancel existing subleases or enter into new subleases without prior written consent of Mortgagee, not to be unreasonably withheld. The new lease shall have same priority as the Lease.
	(g)     At a limit of one per year, if Mortgagee requests an amendment to the Lease that, in Landlord’s judgment, is not material, Landlord will execute amendment with all costs and expenses charged to Tenant.
Attornment	•     The Lease is superior in priority to any Landlord mortgage.

H-4-19

GROUND LEASE
SUMMARY OF CERTAIN PROVISIONS

Ground Lease:   Ground Lease Agreement between Baylor Health Care System (the “Landlord”) and HRT Properties of Texas, Ltd. (the “Tenant”), dated February 3, 2006, as corrected by Memorandum of Correction of Lease and Correction of Memorandum of Lease, executed on October 21, 2008, but effective as of February 3, 2006, as amended by Omnibus Amendment Agreement by and between, among other parties, Landlord and Tenant, dated July 15, 2008 (as corrected and amended, the Lease”)

Defined terms used in this Summary and not otherwise defined shall have the meanings ascribed to them in the Lease. This Summary is not intended to describe all provisions of the Lease and is qualified in its entirety by reference to, and is subject in all respects to, the terms of the entire Lease.

Lease Provision	Summary
Premises	Medical Pavilion, 3900 Junius Street, Dallas, Texas
Expiration Date	December 31, 2059
Renewals	Two ten-year Renewal Options
Annual Fixed Rent	*
Renewal Fixed Rent	*
Additional Rent	*
Contingent Rent	*
Title to Improvements	•     Tenant owns Improvements, subject to reversionary interest of Landlord.
	•     Premises do not include air rights.
Transfer of Leasehold Interest	•     To the extent provided in the Lease, Affiliate Transfers, Subleases and Leasehold Mortgages are permitted and not subject to the separate restrictions on a Transfer.
	•     During the Acceptable Transferee Requirement Period, any Transfer must be to an Acceptable Transferee.
	•     Any Transfer must be to a Qualified Transferee.
	•     No Transfer may be to a Person (or any of its Affiliates) that provides or manages clinical health care services that compete with Baylor Health Care System.
	•     A Change in Control:
	(1)     Is not deemed to be a Transfer;
	(2)     Must not result in Tenant or any Affiliate becoming a Disqualified Person;
	(3)     That occurs during the Acceptable Transferee Requirement Period must include all Affiliates of Tenant which own any portion of the Portfolio;
	(4)     That occurs after the Acceptable Transferee Requirement Period must include all Affiliates of Tenant

H-4-20

Lease Provision	Summary
	which own any portion of the Other Campus Ground Leased Property; and
	(5)   That occurs on or before July 31, 2009 triggers Landlord’s right to repurchase all improvements in the Portfolio and otherwise subject to ground leases with Landlord or any of its Affiliates.
	•     Any Transfer must include Tenant’s entire interest in the Premises, the Improvements and the Other Campus Ground Leased Property.
	•     Landlord has Right of First Offer prior to Tenant’s solicitation of offers for the purchase/sale of the Premises.
	•     Landlord has Right of First Refusal prior to Tenant’s acceptance of an offer to purchase the Premises.
	•     Transferee’s use of Premises must be consistent with permitted use under the Lease, and Transferee must expressly assume Lease in writing.
Summary of Rights of Mortgagee	•     Landlord consent is not required for a Leasehold Mortgage, but condition precedent to Leasehold Mortgage is execution of tri-party agreement among Landlord, Tenant and mortgagee providing Landlord right to purchase the loan for total amount owing.
	•     A Leasehold Mortgage may not encumber property other than the Campus Portfolio.
	•     A Leasehold Mortgage must pertain to the entire Campus Portfolio and Tenant shall not enter into a Leasehold Mortgage for less than the entire Campus Portfolio.
	•     A Leasehold Mortgagee that is an Institutional Lender is not required to be approved by Landlord.
	•     No Leasehold Mortgage may be cross-defaulted with other indebtedness of Tenant that is not secured by the Leasehold Mortgage.
	•     Leasehold Mortgagee has right to notice from Landlord of any default by Tenant under the Lease after providing its address for notice to Landlord.
	•     Leasehold Mortgage shall expressly provide that all notices of default thereunder served on Tenant must be delivered concurrently to Landlord.
	•     Landlord may not terminate the Lease based on a Tenant default if the Leasehold Mortgagee cures the default within 30 days following Landlord’s notice that it intends to terminate the Lease (or such longer period as required, as long as default is not curable by payment or expenditure of money and cure is commenced within such 30 day period and diligently pursued).
	•     If Tenant declares bankruptcy and Leasehold Mortgagee is thereby precluded from pursuing foreclosure or transfer in lieu of foreclosure, Leasehold Mortgagee’s cure period is extended as reasonably required so long as Leasehold Mortgagee uses reasonable and diligent efforts to obtain release of the

H-4-21

EX. H-4
GROUND LEASE TERMS

Lease Provision	Summary
	Premises from bankruptcy proceedings.
	•     No voluntary cancellation, termination, surrender, amendment or modification of the Lease by Tenant is binding on Leasehold Mortgagee without Leasehold Mortgagee’s consent.
	•     Leasehold Mortgagee is not liable for Tenant’s obligations under the Lease until the. Leasehold Mortgagee acquires Tenant’s rights by foreclosure or transfer in lieu thereof. After acquiring Tenant’s interest in the Lease, the Leasehold Mortgagee is only liable for the obligations of Tenant until the Leasehold Mortgagee transfers or assigns the leasehold interest as permitted by the Lease.
	•     If Tenant declares bankruptcy and rejects the Lease, Leasehold Mortgagee may require that Landlord (a) enter into a new lease with Leasehold Mortgagee and (b) convey all Improvements to Leasehold Mortgagee.
	•     Landlord shall execute upon request from Tenant an agreement confirming the agreements of Landlord in the Lease made for the benefit of Leasehold Mortgagee and containing such other terms and provisions as Leasehold Mortgagee may reasonably request that are consistent with the terms of the Lease.
	•     Within 30 days of request, Landlord will certify to the best of its knowledge (a) that the Lease is unmodified except as stated and in full force and effect, (b) dates to which payments have been made, (c) that no notice of default received by Landlord that has not been cured except as stated and (d) that Tenant is not in default.
Attornment	If any lender succeeds to Landlord’s rights. Tenant will attorn to such successor, and will execute any instrument necessary to confirm such attornment.

H-4-22

EX. H-5
INS./CONDEMNATION

EXHIBIT H — 5

INSURANCE PROCEEDS AND CONDEMNATION AWARDS FOR
RESTORATION — CONDITIONS TO USE

     The terms of the applicable ground leases shall govern the application of insurance proceeds and condemnation awards (the “Proceeds”) payable with the respect to the Property during the Term, provided that, to the extent permitted by the applicable ground leases, the Loan Documents will permit Lender to apply Proceeds against the Loan subject to the following provisions to be included in the Loan Documents:

     (a) Notwithstanding the foregoing, after a casualty or a condemnation (a “Destruction Event:”), Lender will make the Proceeds (less any costs incurred by Lender in collecting the Proceeds) available for restoration in accordance with the conditions for disbursements set forth in the Loan Documents, provided that the following conditions are met:

     (i) Borrower or the transferee under a permitted transfer, if any, continues to be Borrower at the time of the Destruction Event and at all times thereafter until the Proceeds have been fully disbursed;

     (ii) no default under the Loan Documents exists at the time of the Destruction Event and no event of default has occurred during the 12 months prior to the Destruction Event;

     (iii) all leases in effect immediately prior to the Destruction Event continue in full force and effect notwithstanding the Destruction Event, except as otherwise approved by Lender;

     (iv) if the Destruction Event is a condemnation, Borrower delivers to Lender evidence satisfactory to Lender that the Improvements can be restored to an economically and architecturally viable unit;

     (v) Borrower delivers to Lender evidence satisfactory to Lender that the Proceeds are sufficient to complete such restoration or if the Proceeds are insufficient to complete such restoration, Borrower first deposits with Lender funds (the “Additional Funds”) that when added to the Proceeds will be sufficient to complete such restoration;

     (vi) if the Destruction Event is a casualty, Borrower delivers to Lender evidence satisfactory to Lender that the insurer under each affected insurance policy has not denied liability under such policy as to Borrower or the insured under such policy;

     (vii) Lender is satisfied that the proceeds of any rent loss insurance in effect together with other available gross revenues from the Property are sufficient to pay debt service payments after paying taxes and assessments, insurance premiums, reasonable and customary

H-5-1

operating expenses and capital expenditures until the restoration is complete;

     (viii) Lender is satisfied that the restoration will be completed on or before the date (the “Restoration Completion Date”) that is the earliest of: (A) 12 months prior to the expiration of the then-existing Term; (B) 12 months after the Destruction Event; (C) the earliest date required for completion of restoration under any lease affecting the Property; or (D) any date required by Law; and

     (ix) for the 12-month period immediately preceding the Destruction Event, the annual Debt Service Coverage was at least 1.15x and, at the time of the Destruction Event, is at least 1.15x, provided that, if the Net Operating Income does not provide such Debt Service Coverage, Borrower expressly authorizes and instructs Lender (at Lender’s sole discretion) to apply an amount from the Proceeds to reduction of the outstanding principal amount of the Loan in order to reduce the annual debt service payments sufficiently for such Debt Service Coverage to be achieved. The reduced debt service payments will be calculated using the Fixed Interest Rate and an amortization schedule that will achieve the same proportionate amortization of the reduced principal over the then-remaining Term as would have been achieved if the principal and the originally scheduled debt service payments had not been reduced. Borrower will execute any documentation that Lender deems reasonably necessary to evidence the reduced principal and debt service payments.

     (b) If the total Proceeds for any Destruction Event are $250,000 or less and Lender elects or is obligated by Law or under the Loan Documents to make the Proceeds available for restoration, Lender will disburse to Borrower the entire amount received by Lender, and Borrower will commence restoration promptly after the Destruction Event and complete restoration not later than the Restoration Completion Date.

     (c) If the Proceeds for any Destruction Event exceed $250,000 and Lender elects or is obligated by Law or under the Loan Documents to make the Proceeds available for restoration, Lender will disburse the Proceeds and any required additional funds (the “Restoration Funds”) upon Borrower’s request as restoration progresses, generally in accordance with normal construction lending practices for disbursing funds for construction costs, provided that the following conditions are met:

     (i) Borrower commences restoration promptly after the Destruction Event and completes restoration on or before the Restoration Completion Date;

     (ii) if Lender requests, Borrower delivers to Lender prior to commencing restoration, for Lender’s approval, plans and specifications and a detailed budget for the restoration;

H-5-2

     (iii) Borrower delivers to Lender satisfactory evidence of the costs of the restoration incurred prior to the date of the request and such other documents as Lender may request, including mechanics’ lien waivers and title insurance endorsements;

     (iv) Borrower pays all costs of restoration whether or not the Restoration Funds are sufficient and, if at any time during the restoration, Lender determines that the undisbursed balance of the Restoration Funds is insufficient to complete restoration, Borrower deposits with Lender, as part of the Restoration Funds, an amount equal to the deficiency within 30 days after receiving notice of the deficiency from Lender; and

     (v) there is no default under the Loan Documents at the time Borrower requests funds or at the time Lender disburses funds.

     (d) If an event of default under the Loan Documents occurs at any time after the Destruction Event, then Lender will have no further obligation to make any remaining Proceeds available for restoration and may apply any remaining Proceeds as a credit against any portion of the Loan selected by Lender in its sole discretion.

     (e) Lender may elect at any time prior to or during the course of restoration to retain, at Borrower’s expense, an independent engineer or other environmental consultant to review the plans and specifications, to inspect restoration as it progresses and to provide reports. If any matter included in a report by the engineer or consultant is unsatisfactory to Lender, Lender may suspend disbursement of the Restoration Funds until the unsatisfactory matters contained in the report are resolved to Lender’s satisfaction.

     (f) If Borrower fails to commence and complete restoration in accordance with the terms of the Loan Documents, then in addition to any other remedies available to Lender, Lender may elect to restore the Improvements on Borrower’s behalf and reimburse itself out of the Restoration Funds for costs and expenses incurred by Lender in restoring the Improvements or Lender may apply the Restoration Funds as a credit against any portion of the Loan selected by Lender in its sole discretion.

     (g) Lender may commingle the Restoration Funds with its general assets and will not be liable to pay any interest or other return on the Restoration Funds unless otherwise required by Law. Lender will not hold any Restoration Funds in trust. Lender may elect to deposit the Restoration Funds with a depository satisfactory to Lender under a disbursement and security agreement satisfactory to Lender.

     (h) Borrower will pay all of Lender’s expenses incurred in connection with a Destruction Event or restoration. If Borrower fails to do so, then in addition to any other remedies available to Lender, Lender may from time to time reimburse itself out of the Restoration Funds.

H-5-3

     (i) If any excess Proceeds remain after restoration, Lender may elect, in its sole discretion, either to apply the excess as a credit against any portion of the Loan as selected by Lender in its sole discretion or to deliver the excess to Borrower.

     (j) No Prepayment Premium or Evasion of Prepayment Premium shall be due in connection with any prepayment of the Loan from Proceeds.

H-5-4

EX. H-6
LIMIT. LIAB.

EXHIBIT H — 6

LIMITATION OF LIABILITY

     The Loan Documents will include the following provisions relating to the limitation of Borrower’s liability:

     (a) Notwithstanding any provision in the Loan Documents to the contrary, except as set forth in paragraphs (b) and (c) of this Exhibit H-6, if Lender seeks to enforce the collection of the Loan, Lender will foreclose its mortgage/deed of trust instead of instituting suit on the note or other instrument evidencing the Loan. If a lesser sum is realized from a foreclosure of the mortgage/deed of trust and the sale of the Property than the then-outstanding amount owed under the Loan, Lender will not institute any suit or proceeding against Borrower or Borrower’s general partners, if any, for or on account of the deficiency, except as set forth in paragraphs (b) and (c) of this Exhibit H-6.

     (b) The limitation of liability in paragraph (a) of this Exhibit H-6 will not affect or impair (i) the lien of the mortgage/deed of trust or Lender’s other rights and remedies under the Loan Documents, including Lender’s right as mortgagee or secured party to commence an action to foreclose any lien or security interest Lender has under the Loan Documents; (ii) the validity of the Loan Documents or the obligations evidenced thereby; (iii) Lender’s rights under any Loan Documents that are not expressly non recourse; or (iv) Lender’s right to present and collect on any letter of credit or other credit enhancement document held by Lender in connection with the obligations evidenced by the Loan Documents.

     (c) The following are excluded and excepted from the limitation of liability in paragraph (a) of this Exhibit H-6 and Lender may recover personally against Guarantor and Borrower and its general partners, if any, for the following:

     (i) all losses suffered and liabilities and expenses incurred by Lender relating to any fraud, intentional misrepresentation or omission by Borrower or any of Borrower’s partners, members, officers, directors, shareholders or principals in connection with (A) the performance of any of the conditions to Lender making the Loan; (B) any inducements to Lender to make the Loan; (C) the execution and delivery of the Loan Documents; (D) any certificates, representations or warranties given in connection with the Loan; or (E) Borrower’s performance of the obligations evidenced by the Loan Documents;

     (ii) all rents derived from the Property after an event of default under the Loan Documents which event of default is a basis of a proceeding by Lender to enforce the collection of the Loan and all moneys that, on the date such event of default occurs, are on deposit in one or more accounts used by or on behalf of Borrower relating to the operation of the Property, except to the extent properly applied to payment of debt service payments, taxes and assessments, insurance

H-6-1

premiums and any reasonable and customary expenses incurred by Borrower in the operation, maintenance and leasing of the Property or delivered to Lender directly or pursuant to the Lock-Box Agreement;

     (iii) the cost of remediation of any Environmental Activity affecting the Property, any diminution in the value of the Property arising from any Environmental Activity affecting the Property and any other losses suffered and any other liabilities and expenses incurred by Lender arising from a default under the provisions of the mortgage/deed of trust substantially in the form of Exhibit H-6A, Part I (and as mutually agreed to by Lender and Borrower);

     (iv) all security deposits collected by Borrower or any of Borrower’s predecessors and not refunded to tenants in accordance with their respective leases, applied in accordance with the leases or Law or delivered to Lender, and all tenant letters of credit and advance , rents collected by Borrower or any of Borrower’s predecessors and not applied in accordance with the leases or delivered to Lender directly or pursuant to the Lock-Box Agreement;

     (v) any fee paid upon the termination of a lease affecting the Property received by Borrower which is not paid to Lender (or an escrow agent selected by Lender) to the extent required under the terms and conditions of the Loan Documents;

     (vi) the replacement cost of any fixtures and personal property owned by Borrower and removed from the Property by Borrower after an event of default occurs;

     (vii) all losses suffered and liabilities and expenses incurred by Lender relating to any acts or omissions by Borrower that result in waste (including economic and non-physical waste) on the Property;

     (viii) all protective advances and other payments made by Lender pursuant to express provisions of the Loan Documents after the occurrence and during the continuance of a default thereunder to protect Lender’s security interest in the Property or to protect the assignment of the property effected by the Loan Documents;

     (ix) all mechanics’ or similar liens relating to work performed on or materials delivered to the Property prior to Lender’s exercising its remedies under the Loan Documents but only to the extent Lender had advanced funds to pay for the work or materials;

     (x) all Proceeds that are not applied in accordance with the Loan Documents;

     (xi) all losses suffered and liabilities and expenses incurred by Lender relating to the forfeiture or threatened forfeiture of the Property to a governmental authority;

H-6-2

     (xii) all losses suffered and liabilities and expenses incurred by Lender relating to any default by Borrower under any of the provisions of the mortgage/deed of trust relating to ERISA;

     (xiii) all losses suffered and liabilities and expenses incurred by Lender relating to any default under any of the provisions of the mortgage/deed of trust relating to anti-terrorism or money laundering;

     (xiv) all losses suffered and liabilities and expenses incurred by Lender relating to any default by Borrower under the provisions of the mortgage/deed of trust requiring Borrower to provide prior notice to Lender of any change in Borrower’s legal name, place of business or state of organization;

     (xv) all losses suffered and liabilities and expenses incurred by Lender relating to the failure to maintain, or to pay the premiums for, any insurance required to be maintained under the Loan Documents; and

     (xvi) all losses suffered and liabilities and reasonable expenses incurred by Lender in connection with any default by Borrower beyond any applicable grace and cure period under any ground leases affecting the Property (including any master ground leases, as applicable) under which Borrower is the tenant or any violation of any covenant contained in the mortgage/deed of trust substantially in the form set forth in Exhibit H-6A, Part II (and as mutually agreed to by Lender and Borrower) or in connection with a termination of any ground lease affecting the Property (but with respect to any default caused by the failure to pay rent under any such ground lease, only to the extent that there exists or existed sufficient funds from the operation of the Property for the payment thereof).

Notwithstanding the foregoing, the limitation of liability set forth in paragraph (a) of this Exhibit H-6 SHALL BECOME NULL AND VOID and shall be of no further force and effect and Lender may recover personally against Borrower and its general partners, if any, in the event of (i) a voluntary bankruptcy or insolvency proceeding of Borrower filed without the prior consent of Lender if such proceeding is not dismissed in accordance with the terms of the mortgage/deed of trust, (ii) an involuntary bankruptcy or insolvency proceeding of Borrower, in which Borrower, any of its principals, officers, general partners or members, or Guarantor colludes with creditors in such bankruptcy or insolvency proceeding if such proceeding is not dismissed in accordance with the terms of the mortgage/deed of trust, (iii) an event of default occurs under any of the covenants or requirements contained in the mortgage/deed of trust relating to maintenance and operation of Borrower as a Special Purpose Entity, or (iv) a transfer of the Property that is not permitted under the mortgage/deed of trust, including the prohibition on any transfer that results in a violation of ERISA, money-laundering laws or the Anti-Terrorism Laws.

H-6-3

     (d) Nothing under paragraph (a) of this Exhibit H-6 will be deemed to be a waiver of any right which Lender may have under Sections 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code or under any other Law relating to bankruptcy or insolvency to file a claim for the full amount of the Loan or to require that all collateral will continue to secure all of the obligations evidenced by the Loan Documents in accordance therewith.

H-6-4

EX. H-6A
LIMIT. LIAB.

EXHIBIT H — 6A

MORTGAGE/DEED OF TRUST PROVISIONS

Part I:

Environmental Representations.

     Except as disclosed in the Environmental Report and to Borrower’s knowledge as of the date of this Deed of Trust:

     (i) no Environmental Activity has occurred or is occurring on the Property other than the use, storage, and disposal of Hazardous Materials which (A) are in the ordinary course of business consistent with the Permitted Use; (B) are in compliance with all Environmental Laws and (C) have not resulted in Material Environmental Contamination of the Property; and

     (ii) no Environmental Activity has occurred or is occurring on any property in the vicinity of the Property which has resulted in Material Environmental Contamination of the Property.

Environmental Covenants.

(a)	Borrower will not cause or knowingly permit any Material Environmental Contamination of the Property.
(b)	Borrower will not cause or knowingly permit any Environmental Activity to occur on the Property other than the use, storage and disposal of Hazardous Materials which (A) are in the ordinary course of business consistent with the Permitted Use; (B) are in compliance with all Environmental Laws; and (C) do not create a risk of Material Environmental Contamination of the Property.
(c)	Borrower will notify Lender immediately upon Borrower becoming aware of (i) any Material Environmental Contamination of the Property or (ii) any Environmental Activity with respect to the Property that is not in accordance with the preceding subsection (b). Borrower promptly will deliver to Lender copies of all documents delivered to or received by Borrower regarding the matters set forth in this subsection, including notices of Proceedings or investigations concerning any Material Environmental Contamination of the Property or Environmental Activity or concerning Borrower’s status as a potentially responsible party (as defined in the Environmental Laws). Borrower’s notification of Lender in accordance with the provisions of this subsection will not be deemed to excuse any default under the Loan Documents resulting from the violation of Environmental Laws or the Material Environmental Contamination of the Property or Environmental Activity that is the subject of the notice. If Borrower receives

H-6-5

	notice of a suspected violation of Environmental Laws in the vicinity of the Property that poses a risk of Material Environmental Contamination of the Property, Borrower will give Lender notice and copies of any documents received relating to such suspected violation.
(d)	From time to time at Lender’s request, Borrower will deliver to Lender any information known and documents available to Borrower relating to the environmental condition of the Property.
(e)	Lender may perform or engage an independent consultant to perform an assessment of the environmental condition of the Property and of Borrower’s compliance with this Section on an annual basis, or at any other time for reasonable cause, or after an Event of Default. In connection with the assessment: (i) Lender or consultant may enter and inspect the Property and perform tests of the air, soil, ground water and building materials; (ii) Borrower will cooperate and use best efforts to cause tenants and other occupants of the Property to cooperate with Lender or consultant, subject to the terms of such tenants’ respective leases and applicable law; (iii) Borrower will receive a copy of any final report prepared after the assessment, to be delivered to Borrower not more than 10 days after Borrower requests a copy and executes Lender’s standard confidentiality and waiver of liability letter; (iv) Borrower will accept custody of and arrange for lawful disposal of any Hazardous Materials required to be disposed of as a result of the tests; (v) Lender will not have liability to Borrower with respect to the results of the assessment; and (vi) Lender will not be responsible for any damage to the Property resulting from the tests described in this subsection and Borrower will look solely to the consultant to reimburse Borrower for any such damage. The consultant’s assessment and reports will be at Borrower’s expense (i) if the reports disclose any material adverse change in the environmental condition of the Property from that disclosed in the Environmental Report; (ii) if Lender engaged the consultant when Lender had reasonable cause to believe Borrower was not in compliance with the terms of this Section and, after written notice from Lender, Borrower failed to provide promptly reasonable evidence that Borrower is in compliance; or (iii) if Lender engaged the consultant after the occurrence of an Event of Default.

If Lender has reasonable cause to believe that there is Environmental Activity at the Property, Lender may elect in its sole discretion to release from the lien of this Deed of Trust any portion of the Property affected by the Environmental Activity and Borrower will accept the release.

H-6-6

Part II:

Ground Lease Provisions.

(a)	The Ground Lease is in full force and effect has not been amended and represents the entire agreement between Borrower and Ground Lessor and there are no defaults, events of default or events which with the passage of time or the giving of notice, would constitute a default or event of default under the Ground Lease.
(b)	Borrower will pay the Ground Rent as and when required under the Ground Lease and will perform all of Borrower’s obligations as ground lessee under the Ground Lease as and when required under the Ground Lease.
(c)	Borrower will cause Ground Lessor to pay and perform all of Ground Lessor’s obligations under the Ground Lease as and when required under the Ground Lease, will not give any approval required or permitted under the Ground Lease without Lender’s prior approval and will not exercise any options under the Ground Lease without Lender’s prior approval.
(d)	Borrower will not amend or waive any provisions of the Ground Lease; cancel or surrender the Ground Lease; or release or discharge Ground Lessor from any of the terms or obligations of the Ground Lease, without in each instance Lender’s prior approval which may be withheld in its sole discretion.
(e)	Borrower promptly will deliver to Lender copies of any notices of default or of termination that Borrower receives or delivers relating to the Ground Lease.
(f)	Without limiting Lender’s independent rights and remedies under Section 365(h) of the Bankruptcy Code:

(i)	Borrower will not elect to treat the Ground Lease as terminated under Subsection 365(h)(l) of the Bankruptcy Code without Lender’s prior consent to be exercised in its sole discretion, any such election made without Lender’s prior consent is null and void;
(ii)	Without in any manner limiting the provisions of subparagraph (i) of this Section, the lien of this Deed of Trust will attach to all of

H-6-7

	Borrower’s rights and remedies at any time arising under or pursuant to Subsection 365(h) of the Bankruptcy Code, including all of Borrower’s rights to remain in possession of the Property and Lender may assert, or direct Borrower to assert, any of such rights and remedies.
(iii)	If, pursuant to Subsection 365(h) of the Bankruptcy Code, Borrower seeks to offset against Ground Rent the amount of any damages caused by Ground Lessor’s failure to perform any of its obligations under the Ground Lease after the Ground Lessor rejects the Ground Lease under the Bankruptcy Code, Borrower will, prior to effecting such offset, notify Lender of its intent to do so, setting forth the amount proposed to be so offset and the basis therefor. Lender will have the right to object to all or any part of such offset and, in the event of such objection, Borrower will not effect any offset of the amount so objected to by Lender. Neither Lender’s failure to object as aforesaid nor any objection or other communication between Lender and Borrower relating to such offset will constitute an approval of any such offset by Lender. Borrower will indemnify, defend and save Lender harmless from and against any and all claims, demands, actions, suits, proceedings, damages, losses, costs and expenses of every nature whatsoever (including attorneys’ fees) arising from or relating to any offset by Borrower against the rent reserved in the Ground Lease.
(iv)	Borrower unconditionally assigns, transfers and sets over to Lender all of Borrower’s claims and rights to the payment of damages arising from any rejection by Ground Lessor of the Ground Lease under the Bankruptcy Code. Lender will have the right to proceed in its own name or in the name of Borrower in respect of any claim, suit, action or proceeding relating to the rejection of the Ground Lease, including the right to file and prosecute, to the exclusion of Borrower, any proofs of claim, complaints, motions, application, notice and other documents, in any case in respect of Ground Lessor under the Bankruptcy Code. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing

H-6-8

	claims, rights and remedies, and will continue in effect until all of the indebtedness and obligations secured by this Deed of Trust will have been satisfied and discharged in full. Any amounts received by Lender as damages arising out of the rejection of the Ground Lease as aforesaid will be applied first to all costs and expenses of Lender (including attorneys’ fees) incurred in connection with the exercise of any of its rights or remedies under this subsection (iv) and then in accordance with subsection (iii) of this Section.
(v)	In any Proceeding under the Bankruptcy Code relating to the Ground Lease or the Property, Borrower will appear in the Proceeding and will protect Lender’s interests in the Property and under the Loan Documents with attorneys and other professionals retained by Borrower and approved by Lender. Lender may elect, in Lender’s sole discretion, to engage its own attorneys and other professionals at Borrower’s expense to appear in the Proceeding and to protect Lender’s interests in the Property and under the Loan Documents. Borrower will not commence any Proceeding, file any application or make any motion relating to the Ground Lease in any Proceeding in its sole discretion under the Bankruptcy Code without Lender’s prior consent.
(vi)	Borrower will give Lender prompt notice of any filing by or against Ground Lessor or Borrower of a Proceeding under the Bankruptcy Code. The notice will set forth any information available to Borrower about the proceeding, including the date of the filing, the court in which the Proceeding was filed, and the relief sought. Borrower also will deliver to Lender, promptly following Borrower’s receipt thereof, any notices, summonses, pleadings, applications and other documents received by Borrower in connection with the Proceeding.
(vii)	If a Proceeding under the Bankruptcy Code is commenced by or against Borrower and Borrower, as lessee under the Ground Lease, rejects the Ground Lease pursuant to Section 365(a) of the Bankruptcy Code without giving Lender not less than 10 Business Days’ prior notice of the date on which Borrower will apply to the bankruptcy court for authority to reject the Ground Lease.

H-6-9

Lender may, in its sole discretion, give Borrower notice within such 10-Business Day period stating that (a) Lender demands that Borrower assume the Ground Lease and assign it to Lender pursuant to Section 365 of the Bankruptcy Code and (b) Lender will cure or provide adequate assurance of prompt cure of all defaults and will provide adequate assurance of future performance under the Ground Lease. In that event, Borrower will not seek to reject the Ground Lease and will comply with the demand provided for in (a) above within 30 days after Lender’s notice was given provided Lender performs its obligations under (b) above.

Effective upon the entry of an order for relief in respect of Borrower under Chapter 7 of the Bankruptcy Code, Borrower hereby assigns and transfers to Lender a non-exclusive right to apply to the bankruptcy court under Subsection 365(d)(1) of the Bankruptcy Code for an order extending the period during which the Ground Lease may be rejected or assumed.

H-6-10

EX. H-7
LOCK-BOX

EXHIBIT H — 7

LOCK-BOX REQUIREMENTS

     At Closing, Borrower will execute an agreement (the “Lock-Box Agreement”) satisfactory to Lender providing for the establishment of an account and sub-accounts (collectively, the “Deposit Account”). The Lock-Box Agreement will include the following provisions:

     (a) On the date of Closing, all revenues from the Property will thereafter be deposited directly into the Deposit Account and disbursed in accordance with the Lock-Box Agreement. The Lock-Box Agreement shall provide that upon a Trigger Event (defined herein), including Borrower’s failure to pay the Loan on or prior to the maturity date of the Loan, Lender will give the administrator of the Deposit Account notice and all funds shall be applied to Lender’s payment “waterfall” prior to any funds being disbursed to Borrower, provided that, while any event of default under the Loan Documents is continuing, Lender will retain the right to declare the Loan immediately due and payable and to exercise all other remedies under the Loan Documents.

     (b) The Deposit Account will be maintained in Lender’s name at a depository institution satisfactory to Lender.

     (c) Lender will have a first priority perfected security interest in the Deposit Account and in all cash and instruments on deposit therein and in any interest thereon or proceeds therefrom and Borrower will execute any documents Lender deems reasonably necessary to document and perfect such security interest.

     (d) Interest earned on the funds in the Deposit Account or any investments thereof will remain in the Deposit Account.

     (e) Borrower will pay the fees and expenses of the administrator of the Deposit Account.

     (f) As used herein, the term “Trigger Event” shall mean either (i) the occurrence of an event of default under the Loan Documents, (ii) a decline in the Debt Service Coverage for the Property below 1.25x, or (iii) if both (A) Applicant fails to maintain a long term debt rating of at least BBB- by Standard & Poor’s Credit Ratings Services, a division of The McGraw Hill Companies, Inc. and Baa by Moody’s Investors Service, Inc. and (B) the Debt Service Coverage for the Property falls below 1.40x.

H-7-1

EX. H-8
MULTI. PROP.

EXHIBIT H — 8

ALLOCATED LOAN AMOUNTS

		Allocated
Property	Size (S. F.)	Loan Amount

Lender will allocate the Loan Amount among the properties comprising the Property based on the Appraisal obtained by Lender pursuant to this Agreement. Lender will notify Borrower of such allocations not less than 10 business days prior to Closing.

H-8-1

EX. H-9
RELEASE

EXHIBIT H — 9

RELEASE PROVISIONS — PARTIAL RELEASE

     During the Term, if Borrower proposes to sell a parcel (the “Release Parcel”) which is part of the Property to a bona fide third party purchaser, then Borrower will be permitted to obtain a release (a “Release”) of the Release Parcel subject to the following conditions and limitations:

I. CONDITIONS:

     (a) The Release is solely for the purpose of a transfer of the Release Parcel to an unaffiliated bona fide purchaser.

     (b) Not less than 90 days prior to the date of the Release, Borrower shall deliver to Lender (i) a notice setting forth (A) the date of the Release, (B) the name of the proposed transferee, and (C) any other information reasonably necessary for Lender to analyze the terms of the Release, and (ii) a non-refundable fee of $35,000 for such Release.

     (c) There shall be no event of default under the Loan Documents on either the notice date or the date of the Release.

     (d) Borrower shall pay all of Lender’s fees and expenses relating to the Release, including third party reports, title costs and outside counsel fees, if applicable.

     (e) Borrower shall deliver to Lender copies of the executed documents evidencing the transfer of the Release Parcel.

     (f) The loan to value ratio of the Property excluding the Release Parcel shall be less than the lesser of (i) 55% or (ii) the loan to value ratio of the Property including the Release Parcel immediately prior to the Release as determined by an appraisal satisfactory to Lender, paid for by Borrower and prepared by an appraiser appointed by Lender.

     (g) The Debt Service Coverage for the 12-month period following the Release based on projected Net Operating Income for the Property exclusive of the Release Parcel will be greater than the greater of (i) 1.40x or (ii) the Debt Service Coverage based on the Net Operating Income of the Property inclusive of the Release Parcel for the 12-month period prior to the Release.

     (h) Lender shall receive (i) 110% of the outstanding principal amount allocated to the Release Parcel (or if no allocation exists in the Loan Documents, an amount equal to 105% of the value of the Release Parcel as determined by an appraisal satisfactory to Lender and paid for by Borrower) (the “Release Amount”) to be applied to the outstanding principal balance of the Loan; (ii) accrued interest and all other sums due on the Loan allocated to the Release Parcel; and (iii) the Prepayment Premium (for purposes of determining such Prepayment Premium (A) the Prepayment Date Principal shall equal the principal amount being prepaid and (B) the Note

H-9-1

Payments shall be deemed to include each of (1) the scheduled debt service payments (determined as if the principal balance of the Loan was equal to the Release Amount) for the period from the date of the Release through the maturity date of the Loan and (2) the Release Amount); in connection with such payment, Lender will reset the monthly installments of principal and interest based upon the remaining term of the original amortization schedule.

     (i) Borrower shall satisfy such conditions as Lender may reasonably require to the Release, including providing any consents or approvals which may be necessary pursuant to Law or documents affecting the Release Parcel and confirming that the Property which remains encumbered by the mortgage/deed of trust complies with applicable Law and has direct access to streets and utilities, and Borrower shall deliver to Lender any other information, approvals and documents reasonably required by Lender relating to the Release.

     (j) Borrower and, if applicable, any Guarantor and Indemnitor, shall execute amendments to the Loan Documents to the extent necessary (as determined by and reasonably acceptable to Lender) and shall deliver to Lender such other documents, instruments, opinions and certificates as Lender shall deem necessary, in its reasonable discretion.

     (k) The Release shall not negatively affect the Property with regard to overall credit risk, tenant quality, geographic risk, lease expiration and similar matters, in each case as determined by Lender in its sole discretion. Lender will not release a property if (i) leases of more than 5% of the net rentable interior square footage of the Improvements (exclusive of the Release Parcel) would expire within 12 months following the date of Release or within 12 months before or after the maturity date of the Loan and (ii) leases of more than 5% of the net rentable interior square footage of the Improvements (exclusive of the Release Parcel) would expire during any 12-month period during the remainder of the then-existing Term.

II. DE MINIMIS RELEASE

     Notwithstanding the foregoing provisions of Section I of this Exhibit H-9 but subject to the limitations set forth in Section III of this Exhibit H-9, Borrower shall have the right to obtain a Release for any Release Parcel for any reason upon satisfaction of the following conditions (a “De Minimis Release”):

     (a) The principal amount of the Loan allocated to the Release Parcel at Closing shall not exceed $2,500,000 (and such allocation shall be based upon the balance of the loan amount at the time of such release) .

     (b) Not less than 90 days prior to the date of the Release, Borrower shall deliver to Lender a notice setting forth (i) the date of the Release, (ii) the name of the proposed transferee, and (iii) any other information reasonably necessary for Lender to analyze the terms of the Release.

H-9-2

     (c) Lender shall receive (i) the Release Amount to be applied to the outstanding principal balance of the Loan, and (ii) accrued interest and all other sums due on the Loan allocated to the Release Parcel; in connection with such payment, Lender will reset the monthly installments of principal and interest based upon the remaining term of the original amortization schedule.

     (d) Borrower shall provide any consents or approvals which may be necessary pursuant to Law or documents affecting the Release Parcel and shall confirm that the Property which remains encumbered by the mortgage/deed of trust complies with applicable Law and has direct access to streets and utilities.

     (e) Borrower shall comply with the conditions set forth in paragraphs (b) , (c), (d), (e) and (j) of Section I of this Exhibit H-9.

III. LIMITATIONS

     (a) No Release will be allowed during the first 12 months of the Term.

     (b) The aggregate number of Releases (exclusive of De Minimis Releases) allowed during the Term may not exceed three.

     (c) No Release (including a De Minimis Release) will be permitted which would cause the aggregate of the Release Amounts to exceed $30,000,000.

     (d) In any three month period, there shall be no more than one Release.

     (e) If a proposed Release does not comply with all of the applicable terms and conditions set forth above, or if an event of default exists under the Loan Documents, the Release will not be permitted.

H-9-3

EX. H-10
SUBSTITUTION

EXHIBIT H — 10

SUBSTITUTION OF COLLATERAL

     During the Term, if Borrower proposes to sell a parcel (the “Substituted Parcel”) which is part of the Property to a bona fide third party purchaser, then as limited below, Borrower will be permitted to substitute (a “Substitution”) a property (the “Substitution New Parcel”) and obtain a release from Lender’s lien for the Substituted Parcel subject to the satisfaction of the following conditions and limitations, satisfaction to be determined by Lender in its reasonable discretion except as otherwise expressly stated:

I. CONDITIONS:

     (a) Lender shall receive not less than 90 days prior written notice of the Substitution, such notice to include (i) a full package of information concerning the Substitution New Parcel and (ii) the payment of a non-refundable fee of $60,000 for each Substitution.

     (b) Borrower shall pay, within 10 days of notice by Lender, a deposit for the costs of any appraisal, engineering or environmental reports required in connection with the Substitution in an amount reasonably determined by Lender.

     (c) There is no event of default under the Loan Documents on either the notice date or the date of the Substitution.

     (d) Borrower shall pay all of Lender’s fees and expenses relating to the Substitution, including third party reports, title costs and outside counsel fees, if applicable.

     (e) Prior to release of the Substituted Parcel, Lender shall receive evidence satisfactory to Lender that the Substituted Parcel is being sold to a bona fide third party purchaser.

     (f) Intentionally deleted;

     (g) The appraised value of the Substitution New Parcel shall be the greatest of the following values: (i) the actual appraised value of the Substituted Parcel or the appraised value allocated to the Substituted Parcel as part of a pool of properties, as selected by Lender in its sole and absolute discretion, in either case as determined at the time of Closing; (ii) the appraised value of the Substituted Parcel at the time of the Substitution (the appraised values described in (i) and (ii) to be determined by appraisals satisfactory to Lender, paid for by Borrower and prepared by an appraiser appointed by Lender); and (iii) the purchase price of the Substituted Parcel pursuant to an executed purchase and sale agreement with a bona fide third party purchaser.

H-10-1

     (h) The Debt Service Coverage for the Property for the 22-month period following the Substitution based on projected Net Operating Income for the Property exclusive of the Substituted Parcel but inclusive of the Substitution New Parcel shall not be less than the greater of (i) 1.40x or (ii) the Debt Service Coverage based on Net Operating Income for the Property inclusive of the Substituted Parcel for the 12-month period prior to the Substitution.

     (i) The Substitution New Parcel conforms in all respects to Lender’s underwriting standards and criteria as well as such other environmental, engineering, legal or title requirements, as Lender may determine in its sole discretion. In addition, the Substitution New Parcel will not negatively affect the Property with regard to overall credit risk, geographic risk, tenant quality, lease expiration and similar matters, as determined by Lender in its sole discretion. A Substitution will not be permitted if (A) leases of more than 5% of the net rentable square footage of the Improvements (exclusive of the Substituted Parcel but inclusive of the Substitution New Parcel) would expire within 12 months following the date of Substitution or within 12 months before or after the maturity date of the Loan or (ii) leases of more than 5% of the net rentable square footage of the Improvements (exclusive of the Substituted Parcel but inclusive of the Substitution New Parcel) would expire during any 12-month period during the remainder of the then-existing Term.

     (j) Borrower, and if applicable, Guarantor and Indemnitor, shall execute and deliver appropriate amendments to the Loan Documents satisfactory to Lender making the Substitution New Parcel part of the security for the Loan, Indemnitor shall execute an Environmental Indemnity with respect to the Substitution New Parcel and Lender shall receive such title assurances and endorsements to its existing policies confirming the priority of its lien on the Substitution New Parcel and extending the coverage of all insurance (including endorsements) offered under the existing policies to the Substitution New Parcel, consenting to the release of the Substituted Parcel, and otherwise confirming no adverse changes in title coverage or the amount thereof.

     (k) Borrower shall satisfy as to the Substitution in a timely fashion each of the Closing conditions set forth in this Agreement that would have been applicable if the Substitution New Parcel had been included in the original Property.

     (l) Borrower shall satisfy such conditions as Lender may reasonably require to the Substitution, including providing any consents or approvals which may be necessary pursuant to Law or documents affecting the Substituted Parcel and confirming that the Property which remains encumbered by the mortgage/deed of trust complies with applicable Law and has direct access to streets and utilities.

H-10-1

II. LIMITATIONS:

     (a) No Substitution will be allowed during the first 24 months of the Initial Term.

     (b) No more than three Substitutions will be allowed during the Term.

     (c) After giving effect to the proposed Substitution, the aggregate amount of the appraised value of the Substitution New Parcel and the appraised values of Substitution New Parcels in any prior Substitutions (measured as of the date of each such Substitution) shall not exceed $30,000,000.

     (d) In any three-month period, there shall be no more than one Substitution.

     (e) If a proposed Substitution does not comply with the terms and conditions set forth above, or if an event of default exists under the Loan Documents, the Substitution will not be permitted.

H-10-1

EX-21

EXHIBIT 21

Subsidiaries of the Registrant

	State of
Subsidiary	Incorporation
5901 Westown Parkway MOB, LLC	DE
593HR, Inc.	TN
Allenmore C, LLC	DE
Ankeny North MOB, LLC	DE
Bellaire Medical Plaza SPE, LLC	DE
Chippenham Medical Offices SPE, LLC	DE
Clive Wellness Campus Building One, LLC	DE
Clive Wellness Campus Building Two, LLC	DE
Clive Wellness Campus Building Five, LLC	DE
Dallas County MOB, LLC	DE
Des Moines South Medical Building, LLC	DE
Des Moines South Medical Building II, LLC	DE
Durham Medical Office Building, Inc.	TX
Healthcare Acquisition of Texas, Inc.	AL
Healthcare Realty Services Incorporated	TN
HR-Pima, LLC	DE
HR Acquisition I Corporation	MD
HR Acquisition of Alabama, Inc.	AL
HR Acquisition of Pennsylvania, Inc.	PA
HR Acquisition of San Antonio, Ltd.	AL
HR Acquisition of Virginia Limited Partnership	AL
HR Assets, LLC	DE
HR Carolinas Holdings, LLC	DE
HR Interests, Inc.	TX
HR Ladco Holdings, LLC	DE
HR of Bonita Bay, Ltd.	AL
HR of Carolinas, LLC	DE
HR of California, Inc.	AL
HR of Indiana, LLC	DE
HR of Iowa, LLC	DE
HR of Kingsport, Inc.	AL
HR of Los Angeles, Inc.	AL
HR of Los Angeles, Ltd.	AL
HR of Massachusetts, Inc.	AL
HR of Nashville, LLC	DE
HR of San Antonio, Inc.	TX
HR of Sarasota, Ltd.	AL
HRT Holdings, Inc.	DE
HRT of Alabama, Inc.	AL
HRT of Delaware, Inc.	DE
HRT of Illinois, Inc.	DE
HRT of Louisiana, Inc.	LA
HRT of Mississippi, Inc.	DE
HRT of Roanoke, Inc.	VA

	State of
Subsidiary	Incorporation
HRT of Tennessee, Inc.	TN
HRT of Virginia, Inc.	VA
HRT Properties of Texas, Ltd.	TX
Johnston-Willis Medical Offices SPE, LLC	DE
K-S Building SPE, LLC	DE
Pasadena Medical Plaza SSJ Ltd.	FL
Pennsylvania HRT, Inc.	PA
Property Technology Services, Inc.	TN
Roseburg Surgery Center, LLC	DE
Southwest General Medical Building (TX) SPE, LLC	DE
Stevens Pavilion, LLC	DE
Stevens Pavilion Parent, LLC	DE
Unico HRT 2005 MOB Venture, LLC	DE
Unico HRT 2006 MOB Venture, LLC	DE
Yakima Valley Parent, LLC	DE
Yakima Valley Subsidiary, LLC	DE
Wentworth Holding Company, LLC	DE

EX-23.2

EXHIBIT 23.2

Consent of Independent Registered Public Accounting Firm

Healthcare Realty Trust Incorporated
Nashville, Tennessee

     We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-150884 and No. 033-79452) and Form S-8 (No. 333-145184 and No. 033-97240) of Healthcare Realty Trust Incorporated of our reports dated February 22, 2010, relating to the consolidated financial statements and financial statement schedules, and the effectiveness of Healthcare Realty Trust Incorporated’s internal control over financial reporting, which appear in this Annual Report on Form 10-K.

/s/ BDO Seidman, LLP  

Nashville, Tennessee
February 22, 2010

EX-31.1

EXHIBIT 31.1

HEALTHCARE REALTY TRUST INCORPORATED
ANNUAL CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David R. Emery, certify that:

1.	I have reviewed this annual report on Form 10-K of Healthcare Realty Trust Incorporated;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ David R. Emery  

David R. Emery 

Chairman of the Board and Chief Executive Officer 

     Date: February 22, 2010

EX-31.2

EXHIBIT 31.2

HEALTHCARE REALTY TRUST INCORPORATED
ANNUAL CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott W. Homes, certify that:

1.	I have reviewed this annual report on Form 10-K of Healthcare Realty Trust Incorporated;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Scott W. Holmes  

Scott W. Holmes 

Executive Vice President and Chief Financial Officer

Date: February 22, 2010

EX-32

EXHIBIT 32

HEALTHCARE REALTY TRUST INCORPORATED
ANNUAL CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of Healthcare Realty Trust Incorporated (the “Company”) on Form 10-K for the year ended December 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David R. Emery, Chairman of the Board and Chief Executive Officer of the Company, and I, Scott W. Holmes, Executive Vice President and Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David R. Emery  

David R. Emery 

Chairman of the Board and Chief Executive Officer 

/s/ Scott W. Holmes  

Scott W. Holmes 

Executive Vice President and Chief Financial Officer 

Date: February 22, 2010