Sunrise on Owning Versus Managing & Developing Ancillary Services

| May 13, 2012

Being a senior housing manager is the core of what Sunrise Senior Living (NYSE:SRZ) does, but the company is also opportunistic in terms of buying real estate in advantageous situations, said its CEO Mark Ordan during the company’s first quarter earnings call. 

“We understand the capital markets, we understand the real estate market, so if there is an opportunity for us to buy real estate in an advantageous way we will do it,” he said. “Similarly, if we think that there is value in our real estate that would be better off with us not owning it and somebody else owning it, that’s fine as well.”

Sunrise used to own a portion of the Ventas (NYSE:VTR) portfolio, Ordan pointed out, but sold it back to the REIT a couple years ago. Since then, his company’s metrics have “only improved.” 

“So, we don’t think that we need to own real estate to maximize the performance of those assets,” he said. “We will do it whether we are manager or we are an owner. We want to make sure that whatever we are doing, we are maximizing value and if that’s buying real estate we will buy it; and if it’s selling real estate, we will sell it.”

On ancillary services:

Sunrise is working toward enabling each of its 320 communities, many of which are owned by the operating company, to have the right to purchase and operate the community at “maximum efficiency” while providing the best care, Ordan said. He also mentioned the company’s efforts to pilot “terrific new programs” for memory care, to maintain its spot as the nation’s largest provider of memory care services. 

“The next obvious step is to say, ‘Well, what other services can we provide to our residents?’” Ordan said during the earnings call, adding that’s something they’ve been working on. “We want to make sure that when we do that, we do it properly and carefully, so that we don’t have a hiccup. So that is something that we foresee adding to what we do.”

As far as ancillary services go, Ordan said he thinks there are “great opportunities” for new service lines, but added that his company wants to keep a strong focus on its core offerings. However, “we still see significant additional opportunity running our business the way we do, just doing it better.”

Read the full earnings call transcript.

Written by Alyssa Gerace


Companies:

Category: Senior Care, Senior Housing

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