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Sunrise Senior Living Inc. Message Board

  • njgreaseman njgreaseman Apr 10, 2006 1:42 PM Flag

    What Impact Cancelled Mgt. Contract?

    Would appreciate feedback on impact of recent $90MM buyout of SRZ Mgt. Contract.
    Would this explain drop last few days.

    SRZ has become high visibility stock. Maybe subject to kneejerk reaction.

    My take is $90MM buyout is relatively small negative in light of all other positive issues, and may not be negative at all if that cash earns more elsewhere like Europe.

    Anybody else's take welcome.

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    • I wondered the same thing. My take is that this is a negative in that is shows the vulnerability of this business model to the whims of others. On the other hand, it is still a marvelous business model (management vs. ownership) that has been used by Marriott successfully in a similar fashion. I assume Sunrise will learn from this and plug any holes in contracts going forward. I would expect this to cool the speculation in the stock short term.

      • 1 Reply to mmsa262
      • I believe that SRZ obtained the 5 Star mgt contract via purhase of Marriott's Assisted Living business.

        SRZ has had the contract long enough to establish their mgt principles. 5 Star may think they can handle without outsourcing, using SRZ model.

        5 Star may not be up to handling thing the SRZ way, and there will be constant comparisons with the change.

        This is not an easy business to run. My mom spent 6 months in at two AL's prior to her passing. Both were good facilities but staffing, feeding, caring for the fragile, emotional and often very confused elderly requires very special skills and know how. That is part of the reason it is so expensive to puchase good assissted living care.

        I do not believe lost of ?10? facilities is a back breaker for SRZ. Some thing else is going on. This is a market that appears to knee jerk react to news, without thoroughly thinking out significance of news-which seems to come days later.

        Anyone else with input or thoughts?