HCP vs. Sunrise: Round 3

June 30, 2009

June 30, 2009
Late last year HCP, Inc. transitioned the management of 11 of its owned properties from Sunrise Senior Living to Emeritus Corporation, and then a few weeks ago announced 15 additional properties will be transitioned away from Sunrise effective October 1, 2009.

Late yesterday HCP announced that it and three of its tenants have filed complaints against Sunrise and it subsidiaries based on Sunrise's "defaults" under management and related agreements covering an additional 64 HCP-owned properties. Sunrise takes exception to the claims of default and stated that these properties have steadily improved their performance, and the company believes that this is just part of HCP's desire to "unlawfully" terminate these management agreements, the majority of which do not have expirations until 2028. If HCP starts to win this legal battle, ongoing negotiations with creditors could stall, and certainly Sunrise's cash flow would decline.


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