MCLEAN, Va., May 4 Sunrise Senior Living, Inc. (NYSE: SRZ) today reported financial results and operating data for the first quarter of 2010. Sunrise will host a conference call and webcast Tuesday, May 4, 2010 at 8:00 a.m. ET, to discuss the financial results.
"In this quarter we continued our operations and balance sheet restructuring efforts to move us toward strengthening our core business results while reducing corporate risk," said Mark Ordan, Sunrise's chief executive officer. "Our progress in both areas reinforces our optimism about our future."
Financial Results for First-Quarter 2010
Sunrise reported revenues of $355.2 million in the first quarter of 2010 as compared to $374.7 million for the first quarter of 2009. Net loss for the first quarter of 2010 was ($16.0) million, or ($0.29) per fully diluted share, as compared to net loss of ($18.2) million, or ($0.36) per fully diluted share, for the first quarter of 2009.
For the first quarter of 2010, net loss from operations was ($10.6) million, an improvement of $30.4 million as compared to a net loss from operations of ($41.0) million in the first quarter of 2009. Adding back non-cash charges including depreciation and amortization of $8.5 million, provision for doubtful accounts of $1.1 million, stock compensation of $0.9 million and impairment of long-lived assets of $0.7 million, as well as non-recurring items including the SEC investigation costs of $58,000 and restructuring costs of $4.9 million, the adjusted income from ongoing operations was $5.6 million as compared to $3.7 million in the first quarter of 2009. Adjusted income from ongoing operations is a measure of operating performance that is not calculated in accordance with U.S. GAAP and should not be considered as a substitute for income or loss from operations or net income or loss. Adjusted income from ongoing operations is used by management to focus on income generated from the ongoing operations of the Company and to help management assess if adjustments to current spending decisions are needed. For a reconciliation of these items, please refer to the attached table "Adjusted Income from Ongoing Operations."
Cash and Liquidity Update
Sunrise had $46.5 million of unrestricted cash at March 31, 2010. Sunrise has no borrowing availability under its bank credit facility, and has significant scheduled debt maturities in 2010 and significant debt that is in default. As of March 31, 2010, Sunrise had debt of $424.2 million, of which $147.1 million of debt is scheduled to mature in 2010, including $33.4 million under its bank credit facility, which is due in December 2010. Debt that is in default totals $241.3 million, including $187.1 million of debt ($200.4 million face) that is in default as a result of the failure to pay principal and interest to the lenders of Sunrise's German communities and $25.6 million of U.S. debt that is due to one of our German lenders. In April 2010, the German debt was restructured, as discussed below. Sunrise is seeking waivers with respect to existing defaults to avoid acceleration of these obligations.
On April 29, 2010, Sunrise announced that the Company and certain of its affiliates had completed the previously announced restructure transactions with three of the lenders to its German subsidiaries, Capmark Finance Inc., Natixis London Branch, and Fortis Bank, UK Branch. Sunrise also announced that it has entered into a partial settlement and waiver declaration with Aareal Bank AG, pursuant to which Sunrise will be released from its guarantee obligations with respect to loans previously made by Aareal to certain of Sunrise's German subsidiaries in exchange for, among other things, a cash payment of euro 2.1 million (approximately $2.8 million).
On May 3, 2010, Sunrise announced that the Company has entered into a settlement agreement with Barclays Bank PLC providing for the settlement and release of all existing and potential future claims of Barclays against Sunrise under Sunrise's guarantee obligations with respect to loans previously made by Barclays to certain of Sunrise's German subsidiaries. In exchange, Sunrise shall, among other things, pay Barclays a principal amount of approximately euro 7.5 million (or approximately $9.9 million) without interest (except in the case of default by Sunrise).
Sunrise has now reached agreements with all of its lenders to its nine German communities. Additional details on these agreements have been included in Sunrise's Current Reports on Form 8-K filed on April 29, 2010 and May 3, 2010, respectively. As a result of these transactions, Sunrise expects to recognize a gain of approximately $50 million in the second and third quarters of 2010.
Comparable Community Operating Data for First-Quarter 2010
The nine German communities have been excluded from Sunrise's first-quarter 2010 comparable community operating results set forth below because they are considered discontinued operations. The five remaining Fountains communities have also been excluded as Sunrise will transition from management in the second quarter of 2010. Sixteen communities previously in lease up joined the comparable-community portfolio on January 1, 2010.
Sunrise's comparable community portfolio consists of communities that were open and operating as of January 1, 2008, and include consolidated, unconsolidated venture, and managed communities in the United States, Canada and the United Kingdom. Sunrise's management believes that total comparable-community revenues, average daily revenue per occupied unit, average unit occupancy rates and total comparable-community expenses are useful indicators of trends in Sunrise's management business.
For additional details on Sunrise's comparable-community and total-community operations data, please refer to the Supplemental Data link on the Investor Relations section of the Company's Web site or at http://suppdata.sunriseseniorliving.com
Conference Call and Webcast
Sunrise will host a conference call and webcast at 8:00 a.m. ET on Tuesday, May 4, 2010, to discuss the financial results for the first quarter of 2010 and the other matters discussed in this press release. The call-in number for the conference call is 877-874-1571 or 719-325-4894 (from outside the U.S.). Callers should reference the "Sunrise Senior Living Q1 Earnings Call" or the participant passcode: 3542059. Those interested may also go to the Investor Relations section of the Company's Web site (http://www.sunriseseniorliving.com) to listen to the earnings call. A telephone replay of the call will be available until May 18, 2010, by dialing 888-203-1112 or 719-457-0820 (passcode: 3542059); a replay will also be available on Sunrise's Web site during that period.
About Sunrise Senior Living
Sunrise Senior Living, a McLean, Va.-based company, employs approximately 40,000 people. As of March 31, 2010, Sunrise operated 365 communities in the United States, Canada, Germany and the United Kingdom, with a combined unit capacity of approximately 36,600 units. 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 and rehabilitative services. 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.
Certain matters discussed in this press release 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 these 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, the risk that the Sunrise is unable to settle the remaining claims with respect to its German subsidiaries; the risk that the Company is not able to sell the North American properties mortgaged pursuant to the restructure transactions; the risk that the net sale proceeds of the mortgaged North American properties are not sufficient to pay the minimum amount guaranteed by Sunrise to the lenders that are party to the restructure transactions; changes in the Company's anticipated cash flow and liquidity; the Company's ability to maintain adequate liquidity to operate its business and execute its restructuring; the Company's ability to obtain waivers, cure or reach agreements with respect to defaults under the Company's loan, joint venture and construction agreements; the risk that a group of the Company's creditors, acting together, could force the Company into an involuntary bankruptcy proceeding; the Company's ability to sell its German communities within a reasonable time period; the Company's ability to refinance extend the maturity of or otherwise repay its bank credit facility due in 2010 and other debt due in 2010 and/or raise funds from other sources; the Company's ability to achieve anticipated savings from the Company's cost reduction initiatives; the outcome of the U.S. Securities and Exchange Commission's investigation; the outcome of the IRS audit of the Company's tax returns for the tax years ended December 31, 2005, 2006, 2007 and 2008; the Company's ability to continue to recognize income from refinancings and sales of communities by ventures; risk of changes in the Company's critical accounting estimates; risk of further write-downs or impairments of the Company's assets; risk of future obligations to fund guarantees and other support arrangements to some of the Company's ventures, lenders to the ventures or third-party owners; risk of declining occupancies in existing communities or slower than expected leasing of new communities; risk resulting from any international expansion; development and construction risks; availability of financing for development, including construction loans as to which we are in default; risks associated with past or any future acquisitions; compliance with government regulations; risk of new legislation or regulatory developments; the risk that some of the Company's management agreements, subject to early termination provisions based on various performance measures, could be terminated due to failure to achieve the performance measures; business conditions and market factors that could affect occupancy rates at and revenues from the Company's communities and the value of the Company's properties generally; competition and our response to pricing and promotional activities of our competitors; changes in interest rates; unanticipated expenses; the risks of further downturns in general economic conditions including, but not limited to, financial market performance, consumer credit availability, interest rates, inflation, energy prices, unemployment and consumer sentiment about the economy in general; risks associated with the ownership and operation of assisted living and independent living communities; and other risks detailed in the Company's 2009 Annual Report on Form 10-K filed with the SEC, as may be amended or supplemented in the Company's Form 10-Q filings or otherwise. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
-- Comparable community revenues for the first quarter of 2010 increased by 2.4 percent, from $483.7 million for the first quarter of 2009 to $495.3 million for the first quarter of 2010. Excluding the impact of foreign exchange rates in 2010, comparable community revenues for the first quarter of 2010 increased 1.3 percent to $489.9 million year-over-year. -- Average unit occupancy in comparable communities for the first quarter of 2010 was 86.2 percent, which was down 150 basis points from 87.7 percent for the first quarter of 2009, and down 50 basis points as compared to 86.7 percent in the fourth quarter of 2009. -- Average daily revenue per occupied unit in comparable communities increased 4.2 percent from $194.99 for the first quarter of 2009 to $203.23 for the first quarter of 2010. Excluding the impact of foreign exchange rates in 2010, average daily revenue per occupied unit for the comparable community portfolio increased 3.1 percent to $201.01 for the first quarter of 2010 as compared to the first quarter of 2009. -- Comparable community operating expenses for the first quarter of 2010 increased 2.1 percent over the first quarter of 2009 from $358.9 million to $366.5 million. Excluding the foreign exchange rates in 2010, these operating expenses increased 1.0 percent to $362.6 million in the first quarter of 2010. -- As of March 31, 2010, Sunrise operated 365 communities located in the United States, Canada, the United Kingdom and Germany, with a unit capacity of approximately 36,600 units.
SOURCE Sunrise Senior Living, Inc.