- The Washington Times - Monday, November 8, 2004

Sunrise Senior Living Inc.’s stock rose to a six-month high yesterday even after the company reported lower quarterly income last week.

The McLean senior-residence operator manages 377 residences. Sunrise owns or holds a share in less than half of the properties it manages.

The company said damages from recent hurricanes in Florida and a lack of income from no property sales during the quarter contributed to its profit decline. Hurricane damages cost the company $800,000.

Profits for the third quarter ending Sept. 30 fell 48 percent to $8.91 million (41 cents per diluted share) from $17.1 million (74 cents) a year earlier. Diluted earnings include the value of convertible warrants and stock options.

The extra costs partially were offset by revenue in the quarter, which climbed 11 percent to $370.3 million from $333 million last year.

Ivan Feinseth, research director at New York investment firm Matrix USA LLC, said he was impressed that Sunrise’s stock was up even though its results were in line or slightly below analyst expectations.

“When a company reports numbers below the consensus, the stock usually goes down. But the stock didn’t do that for this company,’ said Mr. Feinseth, rating the company a “strong buy.”

Jerry Doctrow, an analyst with Baltimore brokerage firm Legg Mason Wood Walker Inc., advised investors to hold Sunrise stock, basing his decision on the stock’s value.

Mr. Doctrow said he lowered his 2004 earnings outlook by a few pennies per share because he expected Sunrise’s higher costs and debts to continue through 2005.

Shares of Sunrise closed yesterday on the New York Stock Exchange at $40.35, up $1.95 from a week ago at $38.40. The stock has ranged from $31.20 to $42.80 in the past year.

Mr. Feinseth said most of Sunrise’s share value is based upon its current performance, with little of the value coming from expected growth. “It’s a good company with high performance and relatively low risk.”

Mr. Feinseth does not own any Sunrise stock and Matrix USA has no banking relationship with the company.

While he was cautious about the company’s near-term growth, Mr. Doctrow said Sunrise’s stepped-up pace of development could boost sales in 2006.

Sunrise, which opened two communities in the quarter, will add 10 more communities in the fourth quarter, 20 more residences in 2005 and 25 more in 2006.

Mr. Doctrow does not own any of the stock, but Legg Mason has a non-banking relationship with Sunrise.

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