Sunrise Senior Living (NYSE:SRZ) announced first quarter results that showed the company was in the midst of transition as it had lower revenues, occupancy rates as well as announced that some further sales of interests in projects as well as the challenges it is facing with lenders on projects currently providing construction financing to projects already underway. Sunrise announced that it revenues of $404 million for the 1st quarter of 2009 versus $413 million for the same period in 2008. The company’s net loss for the quarter was $18.2 million which includes approximately $14 million from the sale of the company’s Greystone interests. Also during the first quarter of 2009, a venture in which Sunrise is a 20-percent member, sold three of its UK communities to a venture in which Sunrise has a 10-percent interest. As a result of these sales, Sunrise recorded its share in earnings of $19.0 million. Sunrise reported that average daily revenue per occupied unit increased 1.8 percent from $182.54 for the first quarter of 2008 to $185.91 for the first quarter of 2009 and that average unit occupancy for the comparable communities for the first quarter of 2009 was 88.1 percent, which was down from 89.5 percent for the first quarter of 2008.
The company announced that most of its construction project that are already underway continue to receive funding from its lenders pursuant to the loan agreements but some lenders have previously notified Sunrise that they believe there are certain defaults under some of the existing construction loans. According to the Sunrise, a venture in which Sunrise has a 20-percent interest, received a notice of default from its lender in March 2009 for alleged violation of financial covenants and other matters. Based on discussions with the lender, Sunrise believes the lender does not intend to provide further draws on the construction loan. Accordingly, Sunrise believes that its equity interest in the venture is impaired and its receivable from the venture is doubtful of collection. The results for the first quarter of 2009 include a charge of approximately $6.5 million attributable to this community.
Sunrise also announced that its sold its equity interest in the unprofitable Aston Gardens venture and was released from all related guarantee obligations as of April 30, 2009. In connection with this sale and release, Sunrise’s management contracts for the six communities in the venture were terminated on April 30, 2009. Sunrise received proceeds of approximately $5.2 million for its equity interest and its receivable from the venture for fundings under the operating deficit guarantees.
"We are pleased with our restructuring efforts and the steps we have taken to date to put the company on more solid footing," said Mark Ordan, Sunrise’s chief executive officer. "We remain especially focused on strengthening our core business, selling cash-draining non-core assets, eliminating non-core activities, shoring up our liquidity, and securing additional capital. Throughout our restructuring efforts, we have never, and will never, make decisions that take away from our mission or the seniors we serve as we move toward profitability."
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