Gray skies begin to clear for Sunrise

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Friday, October 8, 2010

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McLean-based Sunrise Senior Living Inc. will soon put more than two years of crisis management behind it and focus on attracting new residents and providing care for the elderly, CEO Mark Ordan says.

On Oct. 4, the assisted-living giant announced it sold its minority interest in 58 facilities it still manages to majority partner Ventas Inc., raising $42 million to pay off urgently due debt. The announcement was the latest in a string of recent good news for the company, including settling with the Securities and Exchange Commission in July and settling litigation with another business partner in August, which brought in $50 million.

Including the proceeds from the Oct. 4 sale and the legal settlement, Sunrise has whittled down its massive debt — which at one point was more than $400 million — to a “very manageable” level, said Jerry Doctrow, managing partner at research firm Stifel, Nicolaus & Co. in Baltimore.

“It’s gotten beyond a question of whether the company was going to survive — which was a real question at times over the last couple of years,” Doctrow said. “I don’t want to underplay it, there are still issues to be resolved.”

If Doctrow is correct, it would be a remarkable turnaround for Sunrise, founded in 1981 by husband and wife Paul and Terry Klaassen. As the economic slowdown hampered the company’s growth plans in 2007 and 2008, its stock plummeted amid an accounting scandal that started in 2006. Mounting debts nearly forced bankruptcy.

The restructuring has steadily progressed under Ordan, promoted to CEO in 2008 to lead a turnaround. Sunrise will focus on raising its occupancy rates — a challenge amid a still-languid economy — and ensuring all services provided at the 356 senior communities it operates are top notch, he said.

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