Sunrise Senior Living Inc. Reports Operating Results (10-Q)
Sunrise Senior Living Inc. has a market cap of $188.7 million; its shares were traded at around $3.39 with and P/S ratio of 0.1. SRZ is in the portfolios of Steven Cohen of SAC Capital Advisors, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations: Consolidated (Wholly Owned/Leased): operation of wholly owned and leased Sunrise senior living communities in the United States and Canada net of an allocated management fee of $5.7 million and $6.9 million for the three months ended September 30, 2010 and 2009, respectively, and $16.7 million and $20.6 million for the nine months ended September 30, 2010 and 2009, respectively.
In 2009, we announced a plan to continue to reduce corporate expenses through a further reorganization of our corporate cost structure, including a reduction in spending related to, among others, administrative processes, vendors, and consultants. The plan was designed to reduce our annual recurring general and administrative expenses (including expenses previously classified as venture expense) to approximately $100 million. During 2010 and 2009, we have eliminated 203 positions. We have recorded severance expense of $10.8 million as a result of the plan through September 30, 2010. General and administrative expenses were $31.7 million for the third quarter of 2010. We incurred $4.5 million of costs relating to our transaction with HCP and Ventas in the third quarter, in addition to $1.4 million of severance costs and $0.9 million in non-cash stock compensation expense. With the staffing reductions that have already occurred through the end of the third quarter of 2010, our annual recurring cash expenditures for general and administrative expenses are on target to be below $100 million.
During the first nine months of 2010, we (i) entered into agreements to sell our German communities, (ii) executed debt restructuring agreements with the various lenders on our German communities, (iii) sold land parcels and applied the proceeds to outstanding debt, and (iv) reduced the outstanding balance on our outstanding indebtedness with proceeds from management agreement buyouts. As a result of these management agreement buyouts, we have been terminated as manager on 31 communities. We earned $16.8 million and $11.5 million of management fees from these communities in 2009 and for the nine months ended September 30, 2010, respectively. We will not earn these fees in 2011.
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