Sunrise Performance Preview

April 28, 2010

With every quarterly earnings release, the market tries to get an understanding of where the fundamentals are heading for seniors housing operators.  Is occupancy increasing?  Are margins holding?

Are rent increases sustainable in this market?  Even though the public companies represent a fraction of the market, they do provide some insight. 

Today, Ventas released its first quarter earnings, including the performance of its large Sunrise Senior Living portfolio.  The news was mostly good, with a few offsets.  For the 78 same-community stabiliized properties,  NOI increased from $32.7 million in the fourth quarter 2009 to $33.1 million in this year's first quarter.  This increase was the result of a 2.4% increase in the average daily rate to $178 and a 50 basis point increase in margin to 31.4%.  These improvements were offset by a 40 basis point sequential decline in occupancy to 88.4%.  The last two months of the year are usually tough on move-ins.

Comparing the first quarter of 2010 with the first quarter of 2009, these 78 communities posted a 9.9% increase in NOI, resulting from a 4.8% increase in the average daily rate (quite good in this economic environment) and a 160 basis point increase in margin.  Once again, these were partially offset by a 60 basis point drop in occupancy year over year.     

In our May issue of The SeniorCare Investor we will be taking a look at a company trying to deal with its own census issues.  Stay tuned.

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