May 30, 2012
On
The 10 communities had combined average occupancy in 2011 of
approximately 87% and combined gross revenues of approximately
The management contract terms between
Commenting upon today's announcement,
"Because of the expected termination of Sunrise's leases at year end 2013, SNH believes it is important for the community residents and for SNH that these operations be transferred to a manager with a longer term outlook as soon as possible.
"Five Star operates some of the highest quality retirement communities in the country, including several that have achieved national recognition for superior services to residents. SNH will be working with Five Star to conduct a thorough investigation of the staffing and capital needs at these communities; and SNH expects they will become among the best run communities in the country.
"It appears to SNH that Sunrise has made some progress toward improving its financial condition since accounting irregularities were disclosed a few years ago. However, according to information published by Sunrise, Sunrise remains in default of certain debts. In these circumstances and in the absence of continuing guarantees of Sunrise's obligations from Marriott, SNH determined that it would be best for SNH if these operations were transferred to its TRSs and managed by a financially stable, high quality operator like Five Star."
Because of required regulatory approvals, the lease terminations, the new TRS leases and the Five Star management contracts discussed in this press release are expected to be completed during the remainder of 2012.
WARNING REGARDING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS STATEMENTS WHICH CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER SNH USES WORDS SUCH AS "BELIEVE", "EXPECT", "ANTICIPATE", "INTEND", "PLAN", "ESTIMATE" OR SIMILAR EXPRESSIONS, IT IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS AND THEIR IMPLICATIONS ARE BASED UPON SNH'S CURRENT INTENT, BELIEFS OR EXPECTATIONS, BUT THEY ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR FOR VARIOUS REASONS, INCLUDING SOME REASONS BEYOND SNH'S CONTROL. FOR EXAMPLE:
-- THIS PRESS RELEASE STATES THAT THE HISTORICAL OPERATIONS OF THE 10
COMMUNITIES TO BE LEASED TO SNH’S TRSS COVERED THE MINIMUM RENTS DUE SNH
BY 1.5 TIMES IN 2011. AN IMPLICATION OF THIS STATEMENT MAY BE THAT SNH
WILL REALIZE MORE INCOME FROM THESE COMMUNITIES THAN THE HISTORICAL
RENTS SNH RECEIVED. HOWEVER, THE INCOME WHICH SNH MAY REALIZE FROM THESE
10 COMMUNITIES WILL DEPEND UPON THE RESULTS OF FUTURE OPERATIONS MANAGED
BY FIVE STAR. FIVE STAR MAY BE UNABLE TO MAINTAIN THE HISTORICAL
OCCUPANCY AT THESE COMMUNITIES AND FIVE STAR’S OPERATIONS MAY BE MORE
EXPENSIVE THAN SUNRISE’S HISTORICAL OPERATIONS. ALSO, SUNRISE’S FIRST
QUARTER 2012 REPORT INDICATES THAT THE CASH FLOW SUNRISE HAS REALIZED
FROM THESE 10 COMMUNITIES IS LESS THAN THE RENTS DUE SNH AND SNH DOES
NOT KNOW WHETHER THESE RESULTS ARE TEMPORARY AND REVERSIBLE OR IF THEY
INDICATE A MORE SERIOUS LONG TERM DECLINE IN ACHIEVABLE FINANCIAL
RESULTS. FACTORS BEYOND SNH’S OR FIVE STAR’S CONTROL ALSO COULD
ADVERSELY IMPACT THE FUTURE FINANCIAL RESULTS OF THESE COMMUNITIES OR
SOME OF THEM, SUCH AS AN OUTBREAK OF PANDEMICS, OTHER NATURAL DISASTERS
OR CHANGES IN LABOR MARKETS. FOR THESE REASONS, AMONG OTHERS, FIVE
STAR’S MANAGEMENT OF THESE 10 COMMUNITIES MAY NOT PRODUCE FINANCIAL
RESULTS FOR SNH WHICH ARE BETTER THAN, OR EVEN AS GOOD AS, THE
HISTORICAL RENTS SNH RECEIVED.
-- THIS PRESS RELEASE STATES THAT SNH EXPECTS THE LEASE TERMINATIONS, THE
NEW TRS LEASES AND THE FIVE STAR MANAGEMENT CONTRACTS TO BE COMPLETED
DURING THE REMAINDER OF 2012. ALL OF THE 10 COMMUNITIES DISCUSSED IN
THIS PRESS RELEASE ARE OWNED BY SNH FREE AND CLEAR OF MORTGAGE DEBTS AND
NO LENDER APPROVALS WILL BE REQUIRED FOR THE LEASE TERMINATIONS, THE NEW
TRS LEASES OR THE NEW MANAGEMENT AGREEMENTS. HOWEVER, THE TRANSFERS OF
OPERATING CONTROL OF THESE 10 COMMUNITIES ARE SUBJECT TO HEALTH
REGULATORY APPROVALS IN THE STATES WHERE THESE COMMUNITIES ARE LOCATED
AS WELL AS SOME APPROVALS FROM CERTAIN THIRD PARTY PAYORS FOR RESIDENT
SERVICES. SNH CANNOT CONTROL THE RESULTS OR TIMING OF THESE APPROVAL
PROCESSES. ACCORDINGLY, SOME OF THESE APPROVALS MAY BE DELAYED OR MAY
NOT OCCUR AND THE CANCELLATION OF THE SUNRISE LEASES AND TRANSFER OF
OPERATIONS TO SNH’S TRSS MAY BE DELAYED OR MAY NOT OCCUR.
FOR THESE REASONS, AMONG OTHERS, INVESTORS SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS IN THIS PRESS RELEASE.
EXCEPT AS REQUIRED BY LAW, SNH DOES NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
A
No
shareholder, Trustee or officer is personally liable for any act or
obligation of the Trust.
Source: Senior Housing Properties Trust