Sunrise Senior to Sell 21 Properties
By David S. Hilzenrath
Washington Post Staff Writer
Saturday, October 10, 2009
Sunrise Senior Living, struggling under heavy debt in a weak economy, said Friday it is selling 21 assisted-living facilities.
The sale would give the McLean-based company needed funds to pay down borrowing, chief executive Mark Ordan said in a news release.
Sunrise’s battered stock price rose 44.6 percent on the news, to $4.77. That was well above its 52-week low of 27 cents, but still far off its high for the past year of $9.72.
The buyer, Brookdale Senior Living of Nashville, has agreed to pay $204 million, though Sunrise said it expects to receive about $60 million after some of the money goes toward mortgages and other expenses.
The properties being sold are in California, Colorado, Connecticut, Georgia, Indiana, Michigan, New Mexico, North Carolina, Ohio, Pennsylvania and Virginia.
Some of the properties have lost value. Sunrise said it would take a $7 million charge to write them down. But overall, the company said it would record a gain of $50 million on the sale.
The properties being sold include 3.2 percent of the units Sunrise reported operating in its last quarterly financial report.
The deal is part of the troubled firm’s ongoing restructuring effort. Early this year, Sunrise said it might seek bankruptcy protection. In May, it said it was eliminating 150 jobs. At the end of the second quarter, it had debts of $614.5 million, of which $360.4 million was in default. The firm lost $81.8 million in the second quarter as revenue declined.
Paul Klaassen, who co-founded Sunrise with his wife, Theresa, exited as chief executive last year.
Sunrise has won at least temporary reprieves from some of its lenders. On Oct. 1, Wells Fargo extended a $22 million loan on undeveloped land in California until Nov. 16.
The sale announced Friday was another milestone in the retrenchment of a company whose reach exceeded its grasp. In addition to getting overextended, Sunrise had to correct years of accounting errors, erasing $173 million of past profits. As of its last quarterly report, the company was trying to resolve an investigation by the Securities and Exchange Commission.
Sunrise said the sale of the 21 properties requires approval from the company’s banks. The deal is scheduled to be completed in November.