[SUNRISE LOGO GRAPHIC OMITTED]
NEWS RELEASE Contact: Lisa Mayr
For Immediate Release Vice President, Investor
May 8, 2007 Relations and Capital Markets
(703) 744-1787
SUNRISE ANNOUNCES NEW GLOBAL GROWTH TARGET AND REPORTS PRELIMINARY
SELECTED FINANCIAL AND OPERATING DATA FOR FIRST-QUARTER 2007
McLean, Va.--Sunrise Senior Living, Inc. (NYSE: SRZ), today reported
preliminary selected financial and operating data for the quarter ended March
31, 2007.
"Despite the frustrations surrounding our lengthy accounting review, we
are encouraged by the high demand from both consumers and capital investors for
our high quality properties," said Paul Klaassen, chairman and CEO of Sunrise
Senior Living. "As a result, we are increasing our investment in development.
With 42 communities already under construction, we expect to increase capacity
by more than 6,300 residents or 12 percent within the next 18 months, and
between now and the end of 2009 we are targeting breaking ground on new
communities with capacity for over 15,000 residents, bringing worldwide capacity
to over 73,000 residents."
Operational Highlights
o As of March 31, 2007, Sunrise operated 444 communities with capacity
for more than 52,000 residents, located in the United States,
Canada, Germany and the United Kingdom.
o During the quarter, Sunrise opened four new communities and began
construction on five new communities. The company had 42 communities
under construction, with capacity for more than 6,300 residents.
Sunrise has added to its development team to increase development
pace and expects to expand its growth from development going
forward.
o Revenue under management increased 6.4 percent to $564.8 million.
Revenue under management includes revenues generated by Sunrise's
consolidated communities, communities owned in unconsolidated
ventures and communities owned by third parties that are managed by
Sunrise. The prior-year first quarter included approximately $47.1
million in revenues related to the management contracts that were
bought out by Five Star Quality Care, Inc. during 2006. Excluding
the first quarter 2006 revenue under management attributable to
these management agreements, revenue under management grew nearly 17
percent. Revenues under management grew due to stabilization of new
properties opened during the prior year, new openings, acquisitions
and increases in average daily rate.
o Same-community revenues continued to grow during the quarter,
increasing 5.1 percent to $248.0 million as compared to the
prior-year first quarter. Same-community revenues consist of
revenues from all communities in which Sunrise has an ownership
interest (i.e., consolidated communities and venture communities)
and that were stabilized in the first quarter of 2007 and 2006.
Growth in same community revenues was driven by price increases as
well as offering additional services to residents.
o The same-community occupancy rate was strong at 92.6 percent.
Occupancy rates were down over the prior-year first quarter due to
exceptionally high rates in the prior year.
o Average daily rate for the same-community owned portfolio increased
6.6 percent over the prior-year first quarter to $149.35. Rates grew
through increases in resident fees and extended care fees.
o Same-community operating expenses increased 6.5 percent over the
prior-year first quarter. Same-community operating expense excludes
management fees paid to Sunrise with respect to same-community
ventures in order to make comparisons between consolidated and
venture communities consistent. The increase in same-community
operating expense was due to increases in property insurance
premiums, taxes, administration and maintenance expense.
o On January 11, 2007, Sunrise and Prudential Real Estate Investors
(PREI(R)) announced the formation of a $1 billion joint venture to
develop an estimated 18 assisted living communities in the United
Kingdom. This new development venture will add to the 15 UK
communities already opened and 14 communities under development, of
which 4 are under construction.
o At quarter-end, Sunrise had approximately $215 million in cash and
cash equivalents and approximately $130 million in debt, excluding
the impact from Sunrise's accounting review.
Sunrise's management believes that total revenue under management and
total same-community revenues, average daily rate, occupancy and expenses are
useful indicators of trends in Sunrise's management business. For such data
broken down by consolidated communities and unconsolidated ventures, please
refer to the Supplemenetal Information attached. The preliminary financial data
and operating metrics provided herein are not necessarily indicative of the
results of operations of the company for the three months ended March 31, 2007
and 2006. Because the company's restatement of its financial statements, as
further discussed below, has not been completed, Sunrise is unable at this time
to provide a reasonable estimate either of its first quarter 2007 or first
quarter 2006 results of operations.
Update on Pending Restatement
As previously disclosed, Sunrise is undergoing the restatement of its
financial statements for the years ended December 31, 2003, 2004 and 2005. There
has been no significant change to the previously disclosed cumulative impact of
the restatement on net income for all periods impacted; however, Sunrise is
unable at this time to provide the precise impacts of the restatement because
the restatement has not yet been finalized. In addition to the previously
disclosed restatement adjustments, the company has determined that two
previously unconsolidated Sunrise development ventures (six communities) and
three previously unconsolidated Greystone development ventures (three
communities) will need to be consolidated under Financial Accounting Standards
Board Interpretation 46, Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51, as revised ("Fin 46(R)") at December 31, 2005. The
consolidation of these ventures will increase the company's consolidated
revenues and expenses but will not impact the previously disclosed cumulative
impact of the restatement on net income for all periods impacted. The company is
continuing to review with Ernst & Young LLP, the company's independent
registered public accountants, whether any other previously unconsolidated
ventures need to be consolidated under FIN 46(R).
In addition, as previously announced, the board of directors has appointed
a special independent committee to review certain insider sales of Sunrise
stock, the company's historical practices related to stock option grants and the
facts and circumstances relating to the historical accounting treatment of
certain categories of transactions in the pending restatement of the company's
financial statements. The special independent committee has retained independent
outside legal counsel to assist in its review. The special independent
committee's review is ongoing.
Sunrise also previously announced that it has received comments from the
Securities and Exchange Commission (SEC) with respect to certain filings,
including its Form 10-K, as originally filed for the year ended December 31,
2005. Sunrise has responded to these comments and as part of the comment process
will submit preliminary recast 2005 financial information to the SEC for its
review (which will include a summary of the items to be restated and their
anticipated impact). Once the SEC's review of these materials is completed,
Sunrise will prepare full financial statements, including footnotes and
disclosures, for completion of Sunrise's restated 2005 Form 10-K. Adjustments
for periods prior to 2003 will be reflected in the opening balance for retained
earnings in 2003. The filing of the restated 2005 Form 10-K will also require
completion or substantial completion by the special independent committee of its
review.
Sunrise expects to file its 2006 Form 10-Qs, its Form 10-Q for the first
quarter of 2007 and its Form 10-K for the fiscal year ended December 31, 2006 as
soon as possible following the filing of the restated 2005 Form 10-K. The
company is not able to predict at this time the timing of these steps or when
these filings will be made.
Sunrise is also continuing to cooperate fully with the SEC's information
requests and review of matters raised in the media reports prompted by the
letter from Service Employees International Union (SEIU).
Conference Call Information
Sunrise will host a conference call today (Tuesday, May 8, 2007) at 10:00
a.m. ET to discuss the company's preliminary selected financial and operating
data. Paul Klaassen, chairman and chief executive officer, Thomas Newell,
president and Tiffany Tomasso, chief operating officer, will host the call. The
call-in number for the conference call is (800) 289-0533 or (913) 981-5525 (no
password required). Those interested may also go to the Investor Relations
section of the company's Web site, www.sunriseseniorliving.com, to listen to the
call. A telephone replay of the call will be available until May 15, 2007 by
dialing (719) 457-0820 or (888) 203-1112 (passcode: 8773964). The live broadcast
of the conference call will also be available on-line at the company's Web site
in the Investor Relations section. The on-line replay will follow shortly after
the call and continue through August 8, 2007.
About Sunrise
Sunrise Senior Living, a McLean, Va.-based company, employs approximately
40,000 people. As of March 31, 2007, Sunrise operated 444 communities in the
United States, Canada, Germany and the United Kingdom, with a combined capacity
for more than 52,000 residents. At quarter end, Sunrise also had 42 communities
under construction in these countries with a combined capacity for more than
6,300 additional residents. Sunrise offers a full range of personalized senior
living services, including independent living, assisted living, care for
individuals with Alzheimer's and other forms of memory loss, as well as nursing,
rehabilitative and hospice care. Sunrise's senior living services are delivered
by staff trained to encourage the independence, preserve the dignity, enable
freedom of choice and protect the privacy of residents. To learn more about
Sunrise, please visit http://www.sunriseseniorliving.com.
Forward-Looking Statements
Certain matters discussed in this press release, including as to the anticipated
cumulative impact on net income of the restatement, the timing of completion of
the restatement and filing of Sunrise's restated 2005 Form 10-K, Form 10-Qs for
the first three quarters of 2006 and the first quarter of 2007 and 2006 Form
10-K and the company's planned expansion of its development program, may be
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Although Sunrise believes the expectations
reflected in such forward-looking statements are based on reasonable
assumptions, there can be no assurances that its expectations will be realized.
Sunrise's actual results could differ materially from those anticipated in these
forward-looking statements as a result of various factors, including, but not
limited to, identification of any additional matters requiring restatement, the
length of time needed for Sunrise to complete the restatement, and for Ernst &
Young LLP to complete their procedures for any reason, including the detection
of new errors or adjustments, the time required for the special independent
committee to complete its review and for the company to clear comments with the
SEC, development and construction risks, acquisition risks, licensing risks,
business conditions, competition, changes in interest rates, our ability to
manage our expenses, market factors that could affect the value of our
properties, the risks of downturns in general economic conditions, satisfaction
of closing conditions, availability of financing for development and
acquisitions and other risks detailed in the company's annual report on Form
10-K filed with the SEC. The company assumes no obligation to update or
supplement forward-looking statements that become untrue because of subsequent
events.
Sunrise Senior Living, Inc.
Supplemental Information
As of March 31, 2007
($ in millions except average daily rate)
Communities Resident Capacity
----------------- -------------------
Q1 07 Q1 06 Q1 07 Q1 06
------- ------- ------- -------
Community Data (1)
Communities managed for third-party owners 193 200 23,247 26,283
Communities in ventures 188 162 20,911 17,025
Communities consolidated 63 61 8,152 7,979
------- ------- ------- -------
Total communities operated (2) 444 423 52,310 51,287
======= ======= ======= =======
Percentage of Total Operating Portfolio
Assisted Living 72% 67%
Independent Living 23% 24%
Skilled Nursing 5% 9%
------ ------
Total 100% 100%
====== ======
Selected Operating Results
Same-Community Owned Portfolio Operating Results (3) Q1 07 Q1 06 %Change
------ ------ ------
Number of communities 181 181 --
Resident capacity 19,468 19,468 --
Same-Community Revenue
Communities in ventures $156.4 $147.6 6.0%
Communities consolidated 91.6 88.4 3.6%
------ ----- ------
Total same-community revenue $248.0 $236.0 5.1%
====== ====== ======
Same-Community Expense (4)
Communities in ventures $97.4 $90.5 7.6%
Communities consolidated 70.0 66.7 5.0%
====== ====== =====
Total same-community expense $167.4 $157.2 6.5%
Occupancy
Communities in ventures 93.9% 94.8% -0.9%
Communities consolidated 90.6% 92.9% -2.5%
Total average occupancy 92.6% 94.0% -1.5%
Average Daily Rate (5)
Communities in ventures $155.56 $145.22 7.1%
Communities consolidated $139.78 $132.16 5.8%
Total average daily rate $149.35 $140.04 6.6%
Total Portfolio Revenues under Management (6) Q1 07 Q1 06
------ ------
Communities managed for third-party owners $226.9 $249.6 -9.1%
Communities in ventures 236.2 188.6 25.2%
Communities consolidated 101.7 92.4 10.1%
------ ------ ------
Total revenue of communities under management $564.8 $530.6 6.4%
====== ======
Number of Development Communities to be Opened
(Resident Capacity)
Q2 07 Q3 07 Q4 07 Q1 08
------ ------ ------ -----
Consolidated communities (7) 1(77) 1(256) -- 3(273)
Venture communities 8(839) 3(255) 4(390) 2(188)
Managed communities (8) -- 2(449) 4(992)
Notes
(1) Community data does not reflect any potential changes in categories for
communities impacted by the accounting review.
(2) During the first quarter of 2007, Sunrise opened four communities and
assumed management of one community. There was also one management
contract terminated in the first quarter.
(3) Same-community owned portfolio consists of all communities in which
Sunrise has an ownership interest and that were stabilized in the first
quarter of 2007 and 2006. This includes consolidated and venture
communities.
(4) Same-community operating expense excludes management fees paid to Sunrise
with respect to same-community ventures in order to make comparisons
between consolidated and venture communities consistent.
(5) Average daily rate excludes community fees.
(6) Includes revenue for all communities operated by Sunrise, excluding
revenues from hospice care and Sunrise At Home.
(7) Communities are expected to be acquired by a third party or venture prior
to opening.
(8) Includes communities developed by Greystone Communities, Inc., a
wholly-owned subsidiary.