SRZ: Sunrise Senior living Strong Value Buy

NYSE:SRZ http://www.sunriseseniorliving.com/


Sunrise Senior Living, Inc. provides senior living services in the United States, Canada, the United Kingdom, and Germany. It offers independent living services, which include housing, meals, transportation, activities, and housekeeping, as well as licensed skilled nursing services for residents who require 24-hour skilled nursing care; and determination of the appropriate level of care and service for such resident.



(all values in US Dollars)

CMP: 1.36 (Dec 19,2008)
Market Cap: 69.31 Million
Sales 1.722Billion

- Company is the leading brand in Senior Assisted Living facilities.
- Company had accounting issues and has restated its accounts. Income statement has losses of 257.54 million (4 Qtr running Sept 2008)
- Refinancing of existing debt in one of its joint ventures with Ventas. (Dec 4,2008)
- 8.3 million profit for SRZ from refinancing.
- Refinancing was done for 10 year period Jan 2019 at 6.5% interest rate including costs,expenses and fees.
- Company has 441 communities under management with resident capacity of 54000 residents
- Company has communities in USA,Canada,UK and Germany.
- Favourable demographics growth Rate of 80+ citizens USA: 29%, Europe: 44%
- Average Daily rate in communities is 146 - 170 USD.
- High Average Occupancy rate 89 - 91%

- The past accounting problems and the current liquidity problems are already reflected in the share price of the company.

- 95% holding by institutions and high networth individuals



The company stock is available at firesale price. The senior care industry is a growing industry with favourable demographics. Company is in the high end of senior care and has strong brand recognition.
1-2 years the stock price target is 35USD a 2573% appreciation for current level.

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Nov 13,2008: SRZ CEO Mark Ordan alloted 1.5 million shares at 92 cents per share with a 10 year life span. Options expire on Nov 13,2018. Date Reported to SEC: Nov 17,2008
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NYSE Trading details: 19Dec 2008 :
Retail Trading Details: Buy : 3,800 Sell: 2,201
Program Trading: Index Arbitrage: 78,043
The SRZ stock is already out of the Small Cap Index.. looks like the NYSE or some other traders have not made a change in their list of index stocks in their software configuration which is resulting in Index Arbitrage trading on this stock.
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S&P has released new Report on SRZ on Dec 20,2008 as per Yahoo finance
http://finance.yahoo.com/q?s=srz
or
(pay 35 USD) http://reports.finance.yahoo.com/w0?r=34666101:1
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Please See Q1 2008 Investor presentation by Sunrise SRZ:
http://library.corporate-ir.net/library/11/115/115860/items/294758/SRZQ1-08%20InvestorPresentationupdatednoSN.pdf

This will provide details such as room rates, occupancy levels etc
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Sunrise Property UK Video:

http://www.sunriseproperty.co.uk/why-we-win.asp

It is basically for people who want to invest in property market with sunrise or have property in good locations for sunrise to develop them as senior living premises. It does provide some additional info about the company and its properties.. SRZ property in UK have won architecture awards for their designs.. all this and more at the above link.
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The stocks are being held by few players look at the SEC Filings:
Date: Dec 4,2008:
Weiss Multi-Strategy Advisers LLC: 4,800,000 shares
George A. Weiss: 4,800,000 shares
Frederick E. Doucette III: 4,800,000 shares
Weiss Multi-Strategy Partners LLC: 2,554,006

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Date:Nov 20,2008:
Soundpost Partners, LP - 5,016,350
Jaime Lester - 5,016,350

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Nov 7,2008:
RS Value Fund : 3,712,784
RS Investment Management Co. LLC : 6,042,298
Guardian Investor Services LLC : 6,042,298
The Guardian Life Insurance Company of America: 6,042,298

So you have it here : 48,826,384 (48.826 million shares are in strong hands..)
you can confirm the data from this url
http://secfilings.nyse.com/files.php?symbol=SRZ
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Short Interest in SRZ:
- Dec 2008: 5 million.
- Nov 2008: 5 million.
- Oct 2008: 6.7million.
- Sept 2008: 8.3million.
- Aug 2008: 8.7million.
So there was heavy shorting much before the results were out and they are slowly being reduced. With the new Fed funds rate of 0.0 to 0.25 you can expect atleast good corporations in a position to get loans/financing terms.
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Mark S Ordan : Current CEO of Sunrise Senior Living is known to be a turnaround KID:

http://www.washingtonpost.com/wp-dyn/content/article/2007/04/13/AR2007041302045.html

with 1.5 million options he is all set to turn around SRZ also..
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Here is another article about Senior Living companies with reference to Sunrise
http://www.nytimes.com/2008/11/26/business/26senior.html?pagewanted=1&_r=1
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Another article on Sunrise: It chronicles the past and does give almost the full public picture with regards to Sunrise.

Generally more news in the market is a good thing at it sets the stage for a move in the company stock (SRZ) in one direction or another ..
http://www.washingtonpost.com/wp-dyn/content/article/2008/12/21/AR2008122101922.html

We are close to D day Jan 31 when the company should come out with new details about financing and the stock will move up for sure. The news will be available much before jan 31 so don't wanit for the last day..
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Dec 22,2008: Chief Operating Officer Moving to head European Operations
http://sev.prnewswire.com/health-care-hospitals/20081222/PH5412422122008-1.html
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Dec 22,2008: Strip down SRZ valuations considering the ventas emeritus deal : 10 USD per share
http://www.reuters.com/finance/stocks/keyDevelopments?symbol=VTR.N&timestamp=20081222201500&rpc=66


Looking at the Emeritus Ventas Deal :
62.5 million for 432 units thats approximately 144,676 USD per unit as sale price..

• SRZ had 54,000 units 261 ownership and 178 managed ie (54,000/(261+178))*261 = 32,104 ownership interest units.
• Considering the same rates as Emeritus deal (32,104*144676) = 4.64 Billion USD
• Considering ownership interest as 51% holding ie 0.51*4.64 =2.368Billion USD considering prevailing market rates.. (Dec 22,2008)
• Considering all liabilities 1.292Billion we still have (2.368 - 1.292) = 1.076 Billion USD as residual value
• Even 50% off is 538million which is 8.59 times current value ie (8*1.22) = 10 USD per share..
• This is just property .. not included is brand and other not tangible assets such as premier locations, market share and 178 managed property locations (with residual stake)
• Already included is 50% off and all liabilities have been paid off.

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