Remember the phrase “Internet Tsunami” circa 1998? I read a newspaper article read a few weeks ago that looked back at the dot com bubble and examined at how we have evolved with the internet and technology over the last 10 years. Take a minute and think of all the dot com clichés …got ‘em yet? Everyone had an idea on becoming an ‘Internet millionaire’ and how the web will transform the world overnight and dramatically change the way we live. Things didn’t change magically overnight but society’s level of connectedness has dramatically increased in the last 10 years. Many of the premises and concepts of the “Internet Revolution” have come to fruition and our technological transformation has been an ‘evolving revolution’, not an overnight sensation.
The “Silver Tsunami” evokes the same sense of optimism and entrepreneurial spirit about the future business possibilities of the demographics in the US and other parts of the world. Yet the concern is that everyone will want to jump on the “Silver Bandwagon” (are you having déjà vu yet?) and create an inflated hype surrounding all things senior. The senior living industry has been somewhat deflated with economic downturn and the woes in commercial real estate but as the economy recovers, let’s see how quickly small business and the media start re-inflating senior living. Will the Silver Tsunami turn into the Silver Bubble? Probably not but that won’t stop entrepreneurs dreaming and the media selling the drama of all things “Silver”.
Sunrise Senior Living, Inc. (NYSE: SRZ) reported financial results for the first quarter of 2010 that showed revenues of $355.2 million in the first quarter of 2010 as compared to $374.7 million for the first quarter of 2009 and its net loss for the first quarter of 2010 was ($16.0) million as compared to net loss of ($18.2) million for the first quarter of 2009. For the first quarter of 2010, net loss from operations was ($10.6) million, an improvement of $30.4 million as compared to a net loss from operations of ($41.0) million in the first quarter of 2009. Some of Sunrise’s operational highlights include:
Comparable community revenues for the first quarter of 2010 increased by 2.4 percent, from $483.7 million for the first quarter of 2009 to $495.3 million for the first quarter of 2010. Excluding the impact of foreign exchange rates in 2010, comparable community revenues for the first quarter of 2010 increased 1.3 percent to $489.9 million year-over-year.
Average unit occupancy in comparable communities for the first quarter of 2010 was 86.2 percent, which was down 150 basis points from 87.7 percent for the first quarter of 2009, and down 50 basis points as compared to 86.7 percent in the fourth quarter of 2009.
Average daily revenue per occupied unit in comparable communities increased 4.2 percent from $194.99 for the first quarter of 2009 to $203.23 for the first quarter of 2010. Excluding the impact of foreign exchange rates in 2010, average daily revenue per occupied unit for the comparable community portfolio increased 3.1 percent to $201.01 for the first quarter of 2010 as compared to the first quarter of 2009.
Comparable community operating expenses for the first quarter of 2010 increased 2.1 percent over the first quarter of 2009 from $358.9 million to $366.5 million. Excluding the foreign exchange rates in 2010, these operating expenses increased 1.0 percent to $362.6 million in the first quarter of 2010.
“In this quarter we continued our operations and balance sheet restructuring efforts to move us toward strengthening our core business results while reducing corporate risk,” said Mark Ordan, Sunrise’s chief executive officer. “Our progress in both areas reinforces our optimism about our future.”
Sunrise continues to express concern over its liquidity position noting that it had $46.5 million of unrestricted cash and no borrowing availability under its credit facility. As of March 31, 2010, Sunrise had debt of $424.2 million, of which $147.1 million of debt is scheduled to mature in 2010, including $33.4 million under its bank credit facility, which is due in December 2010. Debt that is in default totals $241.3 million, including $187.1 million of debt ($200.4 million face) that is in default as a result of the failure to pay principal and interest to the lenders of Sunrise’s German communities and $25.6 million of U.S. debt that is due to one of our German lenders. Sunrise is seeking waivers with respect to existing defaults to avoid acceleration of these obligations.
Senior Housing News is on the move next few weeks covering two exciting events in San Antonio, Texas and New York City. First stop is this Friday and Saturday at the Mexican Association for Retirement Assistance’s “2B Alive Life Style Communities” and its “Ventana de Mexico” Expo in San Antonio, Texas. The organization promotes how and where to retire in Mexico and has portions for both consumers and for business executives.
The second event is a marketing conference entitled “Beyond Boomers” which will spend a day examining building business strategies that focus on reaching the Baby Boomer demographic. The conference includes topics such as "Transformational Communities: Building Relevance and Quality of Life for Boomers" and "Silver, Social Surfers: Silver Surfers’’Attitudes Toward and Usage of Social Media".
If you’ll be in attendance and would like to set up a time to meet, drop me a line. george@seniorhousingnews.com
Marcus & Millichap Real Estate Investment Services recently announced the sale of Tudor Heights, a 64-unit assisted living facility in the Baltimore suburb of Pikesville, Maryland. The 39,000 square foot facility had an occupancy of 60% at the time of closing. The buyer was Walton Street Capital, L.L.C., a private equity real estate investment firm based in Chicago. Walton Street formed a joint venture with a Senior Lifestyle Corporation, also from Chicago, who will manage the facility for the group. The seller was an entity affiliated with Sunwest Management, Inc., a company that has been operating under an SEC receivership in bankruptcy since January when the former CEO was accused of conducting a massive fraud. The lender DNB National Bank from South Dakota eventually foreclosed on the property after it was released from the receivership allowing the title to the property to transfer back to the lender. The purchase price was not disclosed.
Remember the phrase “Internet Tsunami” circa 1998? I read a newspaper article read a few weeks ago that looked back at the dot com bubble and examined at how we have evolved with the internet and technology over the last 10 years. Take a minute and think of all the dot com clichés …got ‘em yet? Everyone had an idea on becoming an ‘Internet millionaire’ and how the web will transform the world overnight and dramatically change the way we live. Things didn’t change magically overnight but society’s level of connectedness has dramatically increased in the last 10 years. Many of the premises and concepts of the “Internet Revolution” have come to fruition and our technological transformation has been an ‘evolving revolution’, not an overnight sensation. 
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