Sunrise Senior Living — Investor Presentation (May 2008)
38 slides from Sunrise Senior Living's investor presentation, May 21, 2008
Slide 1: We believe in the power of a vision
We believe in the power of a vision. SUNRISE. SENIOR LIVING Q1-2008 Investor Presentation
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain matters discussed in this presentation may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Sunrise believes the expectations reflected in such forward-looking statements are based on reasonable assu
Slide 3: Preliminary Same-Community Metrics
Preliminary Same-Community Metrics Sunrise's management believes that the preliminary same- community metrics contained herein, consisting of same- community revenue growth, expense growth, average daily rate and occupancy, are useful indicators of trends in Sunrise's management business. The prelim
Slide 4: Our History
Our History Founded in 1981 by Paul and Terry Klaassen Pioneered the Assisted Living movement and resident-centered senior care Founders lived in first community Largest global provider Public for 12 years Started leading trade association SENIOR LIVING
Slide 5: Sunrise Senior Living Overview
Sunrise Senior Living Overview 441 managed communities open Capacity for more than 54,000 seniors Average resident aged 80 to 85 Strong development pipeline Over 40 communities under construction 40,000 team members 5 SUNRISE ‘SENIOR LIVING
Slide 6: Major Metropolitan Focus
Major Metropolitan Focus Over 400 Locations in Largest Major Metro Markets in US, UK, Germany, and Canada Pittsburgh Indianapolis SUNRISE SENIOR LIVING
Slide 7: Service Offerings
Service Offerings Skilled Independent Nursing — 7% Living — 24% Assisted Living — 69% (18% Memory Care, 51% Standard AL) ; SUNRISE. ‘SENIOR LIVING
Slide 8: Resident-Centered Approach
Resident-Centered Approach ortation Services 4 a0? SUNRISE SENIOR LIVING
Slide 9: Sunrise Culture
Sunrise Culture Our Mission To Champion Quality of Life for All Seniors ¢ Principles of Service — Preserving Dignity — Nurturing the Spirit — Celebrating Individuality — Enabling Freedom of Choice — Encouraging Independence — Involving Family and Friends le ’ SUNRISE. SENIOR LIVING
Slide 10: Sunrise Signatures
Sunrise Signatures ¢ Fresh cut flowers ¢ Dogs and cats in every community e “Yes” is the answer, now what's the question? ° Executive Directors pour coffee hy ve SUNRISE SENIOR LIVING
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Slide 15: Financial Restatement
Financial Restatement Completed financial restatement and filed 2006 10-K on March 24, 2008 Working diligently to complete 2007 financial statements and file 2007 Form 10-K by July 31, 2008 Goal is to become a current filer during 2008 Continue to improve corporate governance controls pal SUNRISE. S
Slide 16: The Senior Living Market: Attractive Demographics
The Senior Living Market: Attractive Demographics Over $140 billion industry 85+ population growing 3 times faster than total U.S. population (4.2M in 2000 to expected 6.1M in 2010) A 10% increase in the number of seniors would equal more than the entire supply of senior housing In 31 largest MSAs 9
Slide 17: The Senior Living Market: Population Trends
The Senior Living Market: Population Trends Population growth rate projections 2000-2010 50% 4 44% 40% 5 30% 4 21% 20% + 9% 10% + | | zl % 0% T T ; 1 US Total US 80+ Europe Tofal Europe 80+ -10% = yy » Source: US Census Bureau SUNRISE ‘SENIOR LIVING
Slide 18: Attractive Demographics — Residential Net Worth
Attractive Demographics — Residential Net Worth Household Owner-Occupied Real Estate Minus Home Mortgages 12.0 10.0 8.0 + 6.0 4 40 4 2.0 © < > gm & e Na cd eg eg eS 18 Source: Federal Reserve Board More seniors can afford Sunrise Residential net worth has increased significantly over past decade, de
Slide 19: Additional Demand Factors
Additional Demand Factors Longer life spans due to better health care Changes in family structures increasing need for senior housing Senior housing more and more seen as a preferred alternative, improving penetration Most seniors can afford private pay senior housing and care as compared to in-home
Slide 20: The Senior Living Market: Insufficient Supply
The Senior Living Market: Insufficient Supply No other national player has invested in development capacity of any size Much of existing supply is old, institutional, poor quality Market is highly fragmented High barriers to entry — Large capital requirements — Management expertise — Operational com
Slide 21: Community Life Cycle — Cash Flows
Community Life Cycle —- Cash Flows Year 5 * Community stabilizes + Potential refinance/tecapitalization of community — $82 recoups equity, investment return ‘on potential performance incentives, if any Year4 Thereafter + Community opens * Confinuing management + Cosh flow break-even within 12 months
Slide 22: Industry Update — Construction Starts Remain Low
2 Industry Update — Construction Starts Remain Low Long Term Construction Trends 66 Senior Housing Construction Units (000s) 51 46 25 22 22 22 29 29 | | | 1997 1998 1999 2000-2001 2002-2002» 2004 «2005-2008 Source: 2006 NIC | ASHA Senior Housing Construction Trends Report ras SUNRISE ‘SENIOR LIVING
Slide 23: Sunrise Growth Drivers
Sunrise Growth Drivers yf | | | Mf New Same sol Return on Invested SUNRISE SENIOR LIVING
Slide 24: Same-Community Revenue Growth
Same-Community Revenue Growth Total Revenues ($Ms) $219.1 $250.0) $204.5 O Ventures @ Consolidated $200.0, $150.0, Growth from $100.0+ Ventures = 7.2% Growth from Consolidated = 9.2% $50.0+ $0.05 Q1-08 Q1-07 Consists of all communities in which Sunrise has an ownership interest and that were stabili
Slide 25: Same-Community Expense Growth
Same-Community Expense Growth Total Expenses (SMs) $160.05 $144.2 140.0- $135.3 O Ventures sae: @ Consolidated $120.05 $100.0, $80.05 Growth from Ventures = 6.6% $60.0) Growth from $40.05 Consolidated = 5.4% $20.05 $0.0 Q1-08 Q1-07 Consists of all communities in which Sunrise has an ownership intere
Slide 26: Same-Community Average Daily Rate
Same-Community Average Daily Rate $180.0) $160.0, $140.0, $120.0, $100.0, $80.0; $60.0; $40.0; $20.0; $0.0 Consists of all communities in which Sunrise has an ownership interest and that were stabilized $170.80 $159.11 $136.76 O Ventures @ Consolidated Q1-08 Q1-07 in prior year comparable periods -
Slide 27: Same-Community Occupancy
a Same-Community Occupancy 100% + 89.87 71.3% 90.8% 90.4% 90%} 80% | 70% | 60% | 50% | 40% | 30% | 20% | 10% 4 0% Q1-08 Q1-07 Consists of all communities in which Sunrise has an ownership interest and that were stabilized in prior year comparable periods - 205 communities as of March 31, 2008. O Ven
Slide 28: New Construction
2 New Construction Built over 200 mansions to date — constantly innovating Completing construction on 40 communities in 2008 Developing 2,000 to 2,500 units per year in North America Active development pipeline in more than 350 zip codes Only major developer-operator in the market today Long develop
Slide 29: New Management Contracts & Ancillary Services
New Management Contracts & Ancillary Services ° Re-flagging existing communities ¢ Opening new hospice locations where we have community clusters — hospice care complements core services hg SENIOR LIVING
Slide 30: Return on Invested Capital
Return on Invested Capital ¢ Cash from minority interest in joint venture operating cash flows e Recapitalizations of ventures he » SUNRISE SENIOR LIVING
Slide 31: Management Services Model
31 Management Services Model Cash Flows: ° Professional fees from Development/ Design/ Construction Mgmt/ Pre-Opening Services/ Sales & Marketing/ Licensing ¢« Ongoing Long-Term Management Fees « Incentive Fees, if earned ¢ Distributions from Sunrise’s Minority Interest in Ventures ¢ Recapitalizatio
Slide 32: Management Services Model
Management Services Model Total Cost to Build = $25M Mortgage Debt (75%) = $18.75M Net Equity (25%) =$6.25M 80/20 Split: Venture Partner (80%) =$5.0M Sunrise (20%) =$1.25M F ' hy Amounts assumed for illustration purposes only. es SUNRISE. SENIOR LIVING
Slide 33: Management Contract Economics
Management Contract Economics Single Community (S$ in 000s) Community Revenues $6,000 (annual) Sunrise Management fees (5-7%) $300-$420 (annual) - Additional incentive fee for select ventures can be earned based on operating performance. « All community level expenses are paid by venture. * Corporat
Slide 34: Venture Cash Flow
Venture Cash Flow (S$ in 000s) Single Community Community Revenues $6,000 Community Operating Expenses* (4,000) Community Cash Flow $2,000 Debt Service (1,000) Distributable Cash** $1,000 Venture Partner (80%) $800 Sunrise (20%) $200 * Includes management fees wig “* Distributable cash does not incl
Slide 35: Recapitalizations
35 Recapitalizations ($ in 000s) Single Mansion Original cost to build $25,000 Community Cash Flow (year 3) $2,000 Cap Rate 7% (14.3 x Cash Flow) Sale Price $28,600 Gain $3,600 Sunrise Share $720 + possible promotes Amounts assumed for illustrative purposes only. The timing of gain recognition is su
Slide 36: Summary Cash Flows
36 Summary Cash Flows ($ in 000s) Single Mansion Development/Pre-Opening Fees $1,875 Annual Ongoing Mgmt. Fee $300-$420 Annual 20% share of Cash Flow $200 Recapitalization $720 + Amounts assumed for illustrative purposes only. Recognition of income amounts is subject to complex accounting rules for
Slide 37: Sunrise is Serving More Seniors
a7 Sunrise is Serving More Seniors Resident Capacity (000) 59.7 56.5 58.2 06 = '07 04 05 16.6 129 14.8 ° ‘| | | 0 42.8 ‘00 ‘01 ‘02 ‘03 Includes communities under construction. SUNRISE SENIOR LIVING
Slide 38: Summary
Summary « Attractive demographics of a healthier, aging population ° Only major developer-operator in the $140 billion, highly fragmented senior living indusiry with significant barriers to entry « Strong development pipeline in place to support growth « Management services model reduces capital req
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