Sunrise Senior Living Will Receive $80M from Contract Buyouts

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MCLEAN, VA-The cancellation of 12 long-term management contracts will leave Sunrise Senior Living with an $80-million payment of buyout fees now that Newton, MA-based Five Star Quality Care Inc. says it will exercise its right to terminate Sunrise’s management of the dozen properties. The option to cancel the contracts was stipulated as part of Sunrise’s 2003 acquisition of Marriott Senior Living Services. That purchase transferred 30 management contracts from Marriott to Sunrise.

Sunrise’s release on the impending transaction notes that, “Five Star’s right to terminate these contracts is not related to Sunrise’s performance at any of these communities.” According to Sunrise’s second quarter 2005 earnings report, “revenues under management increased 10% to $482.2 million in the second quarter of 2005 from $436.7 million in the second quarter of 2004.” Those revenues included properties owned by third parties such as Five Star, as well as Sunrise’s consolidated communities and co-owned communities.