The leader in the Senior Housing market is showing some major cracks in its financial statements that were released earlier this month showing that the Credit Crunch is affecting their operation in a major way when it comes to development of new inventory. The company posted a net loss of 70 million dollars when it posted its restated financial statements for 2007 and included a $22 million in charges for discontinuation of its condominium projects.
Sunrise’s previously stated development plan for 2008 included a pipeline ranging from 3,200 to 3,400 units and the company expects this number to decreased by up to 50 percent and includes deferring some 2008 project into 2009. The company plans to reduce operating expenses by $15 million to $20 million on an annualized basis beginning in 2009 by a reorganization of its corporate cost structure, including implementation of a voluntary separation program for certain team members, as well as a reduction of spending related to administrative processes, vendors, consultants and other areas.
Will this pull back lead people to say that there is a shortage of senior housing in 2009 and everyone will tout the growth prospects for the market and Sunrise’s stock? Reading the company’s release one might expect the bottom of the Senior Housing market to hit in early 2009, if there truly is a decline in senior housing in conjunction with the broader housing market.