- The Washington Times - Monday, March 4, 2002

Sunrise Assisted Living Inc., a provider of housing for senior citizens, reported higher than expected fourth-quarter and yearly earnings, yet its shares continued trading lower than a year ago because of what analysts called a post-Enron "punishment" of companies that make money mostly through joint ventures.
The stock closed at $23.63 Friday on the New York Stock exchange, lower than the $30s, in which it traded earlier this year before Enron's joint ventures made the news.
Sunrise, based in McLean, has 62 joint ventures in place. The most recent one, announced a month ago, is with a real estate fund managed by Germany's Deutsche Bank AG in a deal to buy as much as $200 million of nursing homes and other properties housing senior citizens.
The company says it will operate the properties and manage the venture in what is the usual deal structure for Sunrise.
"They are a premium operator," says Jerry Doctrow, an analyst with Legg Mason Wood Walker. "Their product will be in solid demand because the number of 85-year-olds is continuing to grow, so Sunrise's prospects are very attractive."
Still, he points out, the stock has been down "largely on post-Enron nervousness about the joint venture structures … even though they provided a lot more disclosure about the real estate joint ventures they use."
Sunrise operated 186 facilities in the United States and the United Kingdom, with capacity of 14,797, as of the turn of the year.
The nursing home industry, under which Sunrise falls, boomed in the early 1990s but suffered a crisis in the latter part of the decade because the industry overbuilt.
But "Sunrise's superior operating and financial model has allowed it to invest for the long term and set itself apart as the industry leader," writes Frank Morgan, an analyst with Jefferies & Co., in his recent report on the company.
Sunrise reported for its fourth quarter ended Dec. 31 net income grew 26 percent to $11.12 million (47 cents per share) from $8.8 million (39 cents) for the like quarter a year earlier. Meanwhile, revenues rose 43 percent to $112.29 million from $78.55 million.
Yearly net income rose 102 percent to $49.1 million ($2.08) from $24.28 million ($1.10). Revenues were up 37 percent to $428.22 million from $312.67 in 2000.
Earnings beat analysts expectations for both the quarter and the year, which Mr. Doctrow attributes to Sunrise's top-notch management and good financial standing.
The company had $631 million in outstanding debt at the end of 2001, but that is expected to fall by about $80 million this year through revenues derived from the sale of 15 to 20 properties this year.
Sunrise recently announced the sale of 14 properties for $223 million, with a dozen of those expected to close during the January to March quarter.
The company also just closed a $107 million refinancing of nine properties, and a $60 million revolving credit line that Sunrise says it plans to use to transition properties from its construction line to permanent financing.
Late last year Sunrise expanded its startup "living at home" operation, which allows seniors to be taken care of at home rather than at a facility, from the Washington region to other Eastern states.
While this venture is not profitable yet, analysts say it's a good growth opportunity for the company and expect the venture to generate income starting next year.

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