HCP (NYSE:HCP) announced today that it has filed complaints Sunrise Senior Living, Inc. (NYSE:SRZ) and its subsidiaries (“Sunrise”) based on Sunrise’s defaults under management and related agreements covering 64 HCP-owned properties operated by Sunrise. The complaints, filed in the Delaware Chancery Court on June 29, 2009, allege, among other things, that Sunrise systematically breached various contractual and fiduciary duties, including operating the properties in a manner that impermissibly favored the interests of Sunrise and its affiliates at the expense of HCP and its tenants. In addition to equitable relief and money damages relating to the defaults, HCP and its tenants are seeking judicial confirmation of rights to terminate the agreements on the 64 properties.
According to HCP, Sunrise responded to HCP’s default notices by denying that it was in violation of its agreements in any material respect. Sunrise Senior Living responded to the lawsuit today with the following statement:
“HCP purchased these communities under long-term management contracts with many years remaining. The communities have steadily improved their performance yet HCP has continually expressed their desire to terminate their agreements,” said Mark Ordan, Sunrise’s chief executive officer. “We see today’s announcement as just another attempt to unlawfully terminate our agreements and we will enforce our rights vigorously on behalf of all Sunrise stakeholders. We are proud of the care and service we deliver to all of our residents and families, and we look forward to continuing to serve these communities.”
With the flurry of activity surrounding the termination of the management agreements on 15 additional Sunrise-managed communities were terminated effective October 1, 2009, HCP appears to be distancing itself from Sunrise through its recent actions.
For the full HCP press release, click here.
For the full Sunrise press release, click here.