Sunrise Senior Living 8-K Sunrise Completes Sale of 21-Community Portfolio

Exhibit 99.2

SUNRISE SENIOR LIVING, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

	Historical						Pro Forma
	September 30,			Pro Forma			September 30,
(In thousands, except per share and share amounts)	2009			Adjustments			2009
ASSETS
Current Assets:
Cash and cash equivalents	$	43,382			9,825	(5)	$	53,207
Accounts receivable, net		37,265			(639	)(6)		36,626
Income taxes receivable		7,330						7,330
Due from unconsolidated communities		24,146			249	(6)		24,395
Deferred income taxes, net		14,999						14,999
Restricted cash		31,857			22,500	(4)		54,357
Assets held for sale		88,254						88,254
German assets held for sale		105,554						105,554
Prepaid insurance		3,838						3,838
Prepaid expenses and other current assets		17,058			(754	)(6)		16,304
Total current assets		373,683			31,181			404,864
Property and equipment, net		419,871			(142,955	)(1)		276,916
Due from unconsolidated communities		18,978						18,978
Intangible assets, net		54,400						54,400
Investments in unconsolidated communities		71,161						71,161
Investments accounted for under the profit-sharing method		13,531						13,531
Restricted cash		100,966						100,966
Restricted investments in marketable securities		33,670						33,670
Other assets, net		9,893						9,893
Total assets	$	1,096,153		$	(111,774	)	$	984,379
LIABILITIES AND EQUITY
Current Liabilities:
Current maturities of debt	$	335,749			(113,229	)(2)	$	222,520
Outstanding draws on bank credit facility		68,878			(25,000	)(3)		43,878
Debt relating to German assets held for sale		200,034						200,034
Accounts payable and accrued expenses		155,332			(4,251	)(6)		151,081
Liabilities associated with German assets held for sale		9,908						9,908
Due to unconsolidated communities		1,883						1,883
Deferred revenue		7,398			(3,656	)(6)		3,742
Entrance fees		35,158						35,158
Self-insurance liabilities		46,174						46,174
Total current liabilities		860,514			(146,136	)		714,378
Debt, less current maturities		19,964			(19,964	)(2)		—
Guarantee liabilities		13,777						13,777
Self-insurance liabilities		62,947						62,947
Deferred gains on the sale of real estate and deferred revenues		17,480			5,000	(7)		22,480
Deferred income tax liabilities		14,999						14,999
Other long-term liabilities, net		102,442						102,442
Total liabilities		1,092,123			(161,100	)		931,023
Equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding		—						—
Common stock, $0.01 par value, 120,000,000 shares authorized, 51,072,275 shares issued and outstanding, net of 392,961 treasury shares, at September 30, 2009		511						511
Additional paid-in capital		461,945						461,945
Retained loss		(471,407	)		49,326	(8)		(422,081	)
Accumulated other comprehensive income		8,864						8,864
Total stockholders’ (deficit) equity		(87	)		49,326			49,239
Noncontrolling interests		4,117						4,117
Total equity		4,030			49,326			53,356
Total liabilities and equity	$	1,096,153		$	(111,774	)	$	984,379

See accompanying notes to the unaudited pro forma consolidated financial statements.

SUNRISE SENIOR LIVING, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009

	Historical						Proforma
	Nine Months Ended						Nine Months Ended
	September 30,			Proforma			September 30,
(In thousands, except per share amounts)	2009			Adjustments			2009
Operating revenue:
Management fees	$	84,305					$	84,305
Resident fees for consolidated communities		319,842			(58,988	)(9)		260,854
Ancillary fees		34,148						34,148
Professional fees from development, marketing and other		11,343						11,343
Reimbursed costs incurred on behalf of managed communities		709,158						709,158
Total operating revenues		1,158,796			(58,988	)		1,099,808
Operating expenses:
Community expense for consolidated communities		242,384			(42,344	)(9)		200,040
Community lease expense		44,765			(197	)(9)		44,568
Depreciation and amortization		41,454			(4,464	)(9)		36,990
Ancillary expenses		31,880						31,880
General and administrative		91,829						91,829
Development expense		10,462						10,462
Write-off of capitalized project costs		14,147						14,147
Accounting Restatement, Special Independent Committee inquiry, SEC investigation and stockholder litigation		3,541						3,541
Restructuring costs		25,883						25,883
Provision for doubtful accounts		11,335			(192	)(9)		11,143
Loss on financial guarantees and other contracts		1,463						1,463
Impairment of long-lived assets		34,962			(22,502	)(9)		12,460
Costs incurred on behalf of managed communities		719,735						719,735
Total operating expenses		1,273,840			(69,699	)		1,204,141
Loss from operations		(115,044	)		10,711			(104,333	)
Other non-operating income (expense):
Interest income		1,428			(3	)(9)		1,425
Interest expense		(10,809	)		3,202	(9)		(7,607	)
Gain on investments		904						904
Other income		4,276			(5	)(9)		4,271
Total other non-operating expense		(4,201	)		3,194			(1,007	)
Gain on the sale and development of real estate and equity interests		20,330						20,330
Sunrise’s share of earnings and return on investment in unconsolidated communities		9,362						9,362
Loss from investments accounted for under the profit-sharing method		(9,157	)					(9,157	)
Loss before benefit from income taxes		(98,710	)		13,905			(84,805	)
Benefit from income taxes		1,449				(14)		1,449
Loss from continuing operations	$	(97,261	)	$	13,905		$	(83,356	)
Earnings per share data:
Basic and diluted net loss per common share
Loss from continuing operations	$	(1.93	)		0.27	(10)	$	(1.66	)
Weighted-average shares outstanding — basic and diluted		50,620						50,620

See accompanying notes to the unaudited pro forma consolidated financial statements.

SUNRISE SENIOR LIVING, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2008

	Historical									Pro Forma
	Twelve Months									Twelve Months
	Ended						Elimination			Ended
	December 31,			Proforma			of Other Dispositions			December 31,
(In thousands, except per share amounts)	2008			Adjustments			after Statement Date			2008
Operating revenue:
Management fees	$	140,030						(8,444	)(11)	$	131,586
Resident fees for consolidated communities		435,580			(80,173	)(9)		(13,727	)(11)		341,680
Ancillary fees		54,633						(12,803	)(11)		41,830
Professional fees from development, marketing and other		59,969						(15,522	)(11)		44,447
Reimbursed costs incurred on behalf of managed communities		1,011,431									1,011,431
Total operating revenues		1,701,643			(80,173	)		(50,496	)		1,570,974
Operating expenses:
Community expense for consolidated communities		335,739			(58,369	)(9)		(18,142	)(11)		259,228
Community lease expense		60,145			(258	)(9)					59,887
Depreciation and amortization		51,276			(6,429	)(9)		(5,350	)(11)		39,497
Ancillary expenses		60,620						(21,977	)(11)		38,643
General and administrative		169,966						(6,344	)(11)		163,622
Development expense		78,305						(43,800	)(11)		34,505
Write-off of capitalized project costs		95,763						(371	)(11)		95,392
Accounting Restatement, Special Independent Committee inquiry,
SEC investigation and stockholder litigation		30,224									30,224
Restructuring costs		18,065									18,065
Provision for doubtful accounts		22,628			(234	)(9)		(2,352	)(11)		20,042
Loss on financial guarantees and other contracts		5,022									5,022
Impairment of long-lived assets		158,338			(1,939	)(9)		(6,506	)(11)		149,893
Costs incurred on behalf of managed communities		1,004,974									1,004,974
Total operating expenses		2,091,065			(67,229	)		(104,842	)		1,918,994
Loss from operations		(389,422	)		(12,944	)		54,346			(348,020	)
Other non-operating income (expense):
Interest income		6,600			(13	)(9)		(320	)(11)		6,267
Interest expense		(21,406	)		5,573	(9)		9,124	(11)		(6,709	)
Loss on investments		(7,770	)								(7,770	)
Other expense		(21,602	)		263	(9)		1,273	(11)		(20,066	)
Total other non-operating expense		(44,178	)		5,823			10,077			(28,278	)
Gain on the sale and development of real estate and equity interests		17,374									17,374
Sunrise’s share of loss and return on investment in unconsolidated communities		(13,846	)								(13,846	)
Loss from investments accounted for under the profit-sharing method		(1,329	)								(1,329	)
Minority interests		8,154						(8,154	)(12)		—
Loss from continuing operations before benefit from income taxes		(423,247	)		(7,121	)		56,269			(374,099	)
Benefit from income taxes		43,483			733	(14)		(5,796	)(15)		38,420
Loss from continuing operations	$	(379,764	)	$	(6,388	)	$	50,473		$	(335,679	)
Earnings per share data:				��
Basic and diluted net loss per common share
Loss from continuing operations	$	(7.54	)	$	(0.13)	(10)	$	1.15	(13)	$	(6.52	)
Weighted-average shares outstanding — basic and diluted		50,345									50,345

See accompanying notes to the unaudited pro forma consolidated financial statements.

SUNRISE SENIOR LIVING, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2007

	Historical									Pro Forma
	Twelve Months									Twelve Months
	Ended						Elimination			Ended
	December 31,			Proforma			of Other Dispositions			December 31,
(In thousands, except per share amounts)	2007			Adjustments			after Statement Date			2007
Operating revenue:
Management fees	$	129,456						(7,163	)(11)	$	122,293
Resident fees for consolidated communities		400,238			(73,284	)(9)		(3,947	)(11)		323,007
Ancillary fees		58,645						(7,518	)(11)		51,127
Professional fees from development, marketing and other		38,855						(9,309	)(11)		29,546
Reimbursed costs incurred on behalf of managed communities		956,047									956,047
Total operating revenues		1,583,241			(73,284	)		(27,937	)		1,482,020
Operating expenses:
Community expense for consolidated communities		288,180			(52,585	)(9)		(3,637	)(11)		231,958
Community lease expense		62,588									62,588
Depreciation and amortization		52,701			(6,901	)(9)		(3,962	)(11)		41,838
Ancillary expenses		68,958						(15,664	)(11)		53,294
General and administrative		188,512						(4,966	)(11)		183,546
Development expense		72,016						(36,940	)(11)		35,076
Write-off of capitalized project costs		28,430									28,430
Accounting Restatement, Special Independent Committee inquiry,
SEC investigation and stockholder litigation		51,707									51,707
Provision for doubtful accounts		8,910			(281	)(9)		(920	)(11)		7,709
Loss on financial guarantees and other contracts		22,005									22,005
Impairment of long-lived assets		7,641									7,641
Costs incurred on behalf of managed communities		956,047									956,047
Total operating expenses		1,807,695			(59,767	)		(66,089	)		1,681,839
Loss from operations		(224,454	)		(13,517	)		38,152			(199,819	)
Other non-operating income (expense):
Interest income		9,514			(22	)(9)		(208	)(11)		9,284
Interest expense		(6,650	)		1,196	(9)					(5,454	)
Other expense		(6,089	)		293	(9)					(5,796	)
Total other non-operating expense		(3,225	)		1,467			(208	)		(1,966	)
Gain on the sale and development of real estate and equity interests		105,081									105,081
Sunrise’s share of income and return on investment in unconsolidated communities		108,947						(1,600	)(11)		107,347
Income from investments accounted for under the profit-sharing method		22									22
Minority interests		4,470						(4,470	)(12)		—
Loss from continuing operations before provision for income taxes		(9,159	)		(12,050	)		31,874			10,665
Provision for income taxes		(9,068	)		4,736	(14)		(12,526	)(15)	��	(16,858	)
Loss income from continuing operations	$	(18,227	)	$	(7,314	)	$	19,348		$	(6,193	)
Earnings per share data:
Basic and diluted net loss per common share
Loss from continuing operations	$	(0.37	)	$	(0.15	)(10)	$	0.44	(13)	$	(0.08	)
Weighted-average shares outstanding — basic and diluted		49,851									49,851

See accompanying notes to the unaudited pro forma consolidated financial statements.

SUNRISE SENIOR LIVING, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2006

	Historical									Pro Forma
	Twelve Months									Twelve Months
	Ended						Elimination			Ended
	December 31,			Proforma			of Other Dispositions			December 31,
(In thousands, except per share amounts)	2006			Adjustments			after Statement Date			2006
Operating revenue:
Management and buyout fees	$	251,958						(5,313	)(11)	$	246,645
Resident fees for consolidated communities		379,442			(67,182	)(9)		(26,059	)(11)		286,201
Ancillary fees		56,673						(2,579	)(11)		54,094
Professional fees from development, marketing and other		28,553						(11,607	)(11)		16,946
Reimbursed costs incurred on behalf of managed communities		911,979									911,979
Total operating revenues		1,628,605			(67,182	)		(45,558	)		1,515,865
Operating expenses:
Community expense for consolidated communities		274,545			(50,196	)(9)		(24,522	)(11)		199,827
Community lease expense		59,046			(597	)(9)		(10	)(11)		58,439
Depreciation and amortization		47,687			(6,149	)(9)		(4,809	)(11)		36,729
Ancillary expenses		59,029						(6,710	)(11)		52,319
General and administrative		136,989						(2,609	)(11)		134,380
Development expense		63,634						(33,088	)(11)		30,546
Write-off of capitalized project costs		1,329									1,329
Accounting Restatement, Special Independent Committee inquiry,
SEC investigation and stockholder litigation		2,600									2,600
Provision for doubtful accounts		13,965			(256	)(9)		(787	)(11)		12,922
Loss on financial guarantees and other contracts		89,676									89,676
Impairment of long-lived assets and write-off of unamortized contract costs		40,408						(681	)(11)		39,727
Costs incurred on behalf of managed communities		911,979									911,979
Total operating expenses		1,700,887			(57,198	)		(73,216	)		1,570,473
Loss from operations		(72,282	)		(9,984	)		27,658			(54,608	)
Other non-operating income (expense):
Interest income		9,476			(6	)(9)		(295	)(11)		9,175
Interest expense		(6,194	)		1,413	(9)		10	(11)		(4,771	)
Loss on investments		(5,610	)								(5,610	)
Other expense		6,706			97	(9)					6,803
Total other non-operating income		4,378			1,504			(285	)		5,597
Gain on the sale and development of real estate and equity interests		51,347									51,347
Sunrise’s share of loss and return on investment in unconsolidated communities		43,702									43,702
Loss from investments accounted for under the profit-sharing method		(857	)								(857	)
Minority interests		6,916						(6,916	)(12)		—
Income from continuing operations before provision for income taxes		33,204			(8,480	)		20,457			45,181
Provision for income taxes		(17,527	)		3,332	(14)		(8,040	)(15)		(22,235	)
Income from continuing operations	$	15,677		$	(5,148	)	$	12,417		$	22,946
Earnings per share data:
Basic net income per common share
Income from continuing operations	$	0.32		$	(0.11	)(10)	$	0.34	(13)	$	0.55
Diluted net income per common share
Income from continuing operations	$	0.31		$	(0.10	)(10)	$	0.34	(13)	$	0.55
Weighted-average shares outstanding — basic		48,947									48,947
Weighted-average shares outstanding — diluted		50,722									50,722

See accompanying notes to the unaudited pro forma consolidated financial statements.

SUNRISE SENIOR LIVING, INC.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Basis of Presentation

     The unaudited pro forma financial information is presented to illustrate the effect of our November 18, 2009 sale of 21 properties on our historical financial position and operating results. The unaudited pro forma balance sheet is as of September 30, 2009 and is based on our historical statements after giving effect to the transaction as if it had occurred on September 30, 2009. The unaudited pro forma statements of operations for the nine months ended September 30, 2009 and the twelve months ended December 31, 2008, 2007 and 2006 are based on our historical statements for such periods after giving effect to the transaction as if it had occurred on January 1 of each year. The unaudited pro forma financial information should be read in conjunction with our historical consolidated financial statements and notes thereto contained in our 2008 Annual Report on Form 10-K, as amended, filed on March 31, 2009 and our Form 10-Q for the quarter ended September 30, 2009 filed on November 9, 2009.

     The preparation of the unaudited pro forma consolidated financial information is based on financial statements prepared in accordance with accounting principles generally accepted in the United States of America. These principles require the use of estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates.

     The unaudited pro forma consolidated financial information is provided for illustrative purposes only and does not purport to represent what the actual results of our operations or financial position would have been had the transaction occurred on the respective dates assumed, nor is it necessarily indicative of our future operating results or financial position. However, the pro forma adjustments reflected in the accompanying unaudited pro forma consolidated financial information reflect estimates and assumptions that our management believes to be reasonable.

Note 2 — Pro Forma Adjustments

The unaudited pro forma consolidated balance sheet at September 30, 2009 reflects the following adjustments:

1)	Adjustment to remove property and equipment, net for the net book value of the sold properties.
2)	Assignment to purchaser or payoff of debt related to sold properties.
3)	Pay down of bank credit facility with proceeds from the transaction.
4)	Placement of $20 million in a restricted cash account for use in paying down other creditors in the future. In addition, $2.5 million was placed in escrow for potential future indemnification liabilities.
5)	Net cash received from transaction after giving effect to the settlement of net working capital, paydown of bank credit facility, posting of required escrows and payment of transaction costs at September 30, 2009.
6)	Working capital associated with sold properties.
7)	To record indemnification liability cap of $5.0 million. The indemnification period is one year following the closing of the transaction.
8)	Reflect the approximate gain on the transaction before any tax effect.

The unaudited pro forma consolidated statements of operations for the years ended December 31, 2008, 2007 and 2006 and for the nine months ended September 30, 2009 reflect the following adjustments:

9) The elimination of revenues and expenses of properties sold in current transaction.

10)	The elimination of per share loss of properties sold in current transaction.
11)	The elimination of dispositions or expected dispositions classified as discontinued operations at September 30, 2009 but included in continuing operations in historical statements.
12)	The reclassification of minority interest from continuing operations.
13)	The elimination of per share loss of dispositions or expected dispositions classified as discontinued operations at September 30, 2009 but included in continuing operations in historical statements.
14)	Tax expense associated with the operations of the properties sold in the transaction except for the nine months ended September 30, 2009 for which we have a full valuation allowance.
15)	Net tax benefit associated with discontinued operations and noncontrolling interests.