Sunrise Senior Living Inc. (
Q4 2010 Earnings Conference Call
February 25, 2011, 9:00 am ET
Meghan Lublin – IR
Mark Ordan – CEO
Greg Neeb – CIO, CAO
Marc Richard – CFO
Julie Pangelinan – CAO
Jerry Doctrow – Stifel Nicolaus
Christina Blaishek [ph] – William Blair
Morton Sachs [ph] – Sachs Investment Group
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Good day and welcome to the Sunrise Senior Living Fourth Quarter Earnings Conference Call. As a reminder, today’s conference is being recorded. At this time I would like to turn the conference over to Ms. Meghan Lublin. Please go ahead madam.
Thank you. Welcome to Sunrise Senior Living Investor Conference Call, this is Meghan Lublin of Sunrise’s Investor Relation. Before we begin, let me remind you that this call is been recorded and the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995 apply to this conference call.
During the course of this call the company will make various remarks concerning management’s expectations, predictions, plans, and prospects that constitute forward-looking statements. Actual results may differ materially from those anticipated by these forward-looking statements. Any forward-looking statements reflect management’s current view only and the company undertakes no obligation to revise or update such statements in the future.
I will now turn the call over the Mark Ordan, Sunrise’s Chief Executive Officer.
Thanks Meghan. With me this morning are Greg Neeb, our Chief Investment and Administrative Officer and Marc Richard, our incoming Chief Financial Officer. Also with me is Julie Pangelinan, our current CFO who will be leaving Sunrise in a few weeks.
Julie is a first-class accounting professional who did so much, first to enable Sunrise’s survival and then put us on a path of ongoing reliable success. We can’t thank Julie and after all she has done for us.
2010, was the year of significant strengthening of Sunrise preparing us for strong future. We announced strong operating results this morning including comparable community occupancy of 88.3%, which was 80 basis points ahead of the same period last year and 60 basis over the prior quarter. We posted average daily rate growth of 3.7% over the fourth quarter 2009. Of course, we now operate a smaller revenue base and our overhead has not declined tremendously [ph].
We restored our balance sheet, dramatically reduced our debt, and restructured several of our joint venture and management relationships. We also made a major first step in our stated goal of owning more of what we manage with the recent acquisition with the CNL Lifestyle lease of one of our finest portfolios.
We were just as busy restructuring our operations where we both recruited from outside and in some cases like with our cohesive operations promoted strong professional from with them. Virtually every area of the Sunrise operations and community support team has been strengthened and here again we have a built a great foundation for future success.
Our team has successfully climbed many mountains before and I’m confident that together we can cross the hill we still face. We’ve continued to deal with many legacy issues at Sunrise, fortunately among them is our strong brand and reputation.
We have the sectors perennially leading brand and we have many plans to build this all important area. When I refer to the hills, we still have to climb let me clear, first, we reduced the size of Sunrise fairly dramatically and while our fixed overhead run rate has declined and has not declined enough yet and we still have outside G&A costs hitting each quarter. We’re tackling this now.
Also, now that major parts of the old Sunrise have been discontinued, our management partnerships and contracts now are the major pieces of our business. As you will see in a full reading of our 10-K and 8-K filed this morning, we have provided additional supplemental disclosure to help you better understand both our revenue strength components as well as pointing out, including specifically in the 8-K filed this morning, the continuing imbalances in some of our JV
Well, these relationships are not individually material, they’re still very important to our revenue base and we intend to work on the imbalances to find a comfortable resolution. Again, to be clear, we believe in transparency and we have high confidence that the legacy challenges before us are manageable, just as larger past challenges were.
We want you know that while we agree with recent headline, Sunrise Senior Living is back, we haven’t moved our offices to Tahiti. This work to be done and we’re looking forward to doing this as any strong independent and committed management team should.
In just a moment, our Chief Administrative Officer, Greg Neeb and our Chief Accounting Officer and incoming CFO Marc Richards will provide additional detail about the quarter. But before they do, I’ll expand on some of the relationships that are essential to Sunrise.
In 2010, not only do we structure our relationship with Ventas, we built on an already strong relationship to put us on a path of increased performance in this major portfolio. We work very closely with the entire Ventas team to find ways to add value to our assets and this process is already borne through.
Our relationship with HCP, which was strained as we entered 2010 was also restructured and is now positive and constructive. We are of course excited that we have renewed our relationship with CNL with the purchase of the portfolio we once owned with our Capita. We are also very proud of both the continuing relationship we have with our Capita in the U.K. and of the mutually valued added relationship that ended with the CNL Sunrise purchase.