Sunrise Reports Financial Results for Third Quarter of 2011

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Nov 07, 2011, 05:00 ET

MCLEAN, Va., Nov. 7, 2011 /PRNewswire/ -- Sunrise Senior Living, Inc. (NYSE: SRZ) today reported financial results and operating data for the third quarter of 2011. Sunrise will host a conference call and webcast on Tuesday, November 8, 2011, at 9:00 a.m. ET, to discuss the financial results.

Mark Ordan, Sunrise's chief executive officer, commented on the quarter, "We are pleased to report very solid third quarter performance where occupancy, rates, and NOI increased while our recurring overhead run rate was significantly reduced."

2011 Third Quarter Results

In the third quarter of 2011, Sunrise reported a net loss of ($8.7) million or ($0.15) per fully diluted share, as compared to net income of $18.7 million, or $0.33 per fully diluted share, for the third quarter of 2010. Sunrise's third quarter 2011 results included $3.0 million in buyout fees relating to the buyout of 4 management contracts. Sunrise's third quarter 2010 results included $40.0 million in buyout fees relating to the buyout of 27 management contracts.

Adjusted EBITDAR for the third quarter of 2011 was $37.0 million as compared to $31.8 million for the third quarter of 2010. This measure is used by management to focus on income generated from the ongoing operations of the Company. Adjusted EBITDAR is a measure of operating performance that is not calculated in accordance with U.S. GAAP and should not be considered as a substitute for income/(loss) from operations or net income/(loss). For a reconciliation of this measure, please refer to the attached table "Reconciliation for EBITDA, Adjusted EBITDA and Adjusted EBITDAR."

Cash and Liquidity Update

Sunrise had $82.9 million of unrestricted cash at September 30, 2011. As of September 30, 2011, Sunrise's consolidated debt was $555.7 million, as compared to $163.0 million at December 31, 2010, an increase of $392.7 million. The increase in consolidated debt primarily relates to the AL US acquisition totaling $323.1 million (at fair value) and the issuance of junior subordinated convertible notes totaling $86.3 million during the second quarter of 2011.

Sunrise entered into a new $50 million senior revolving line of credit with KeyBank during the second quarter of 2011. As of September 30, 2011, there were no outstanding draws against this credit facility and $9.8 million of letters of credit were issued and outstanding. Sunrise has $0.9 million in outstanding letters of credit on its terminated Bank of America Bank Credit Facility that are fully cash collateralized.

Joint Venture Transaction with CNL Lifestyle Properties

On August 2, 2011, Sunrise and its venture partner in a portfolio of six communities transferred ownership of the portfolio to a new joint venture owned 70 percent by a wholly owned subsidiary of CNL Lifestyle Properties, Inc. ("CNL Lifestyle Properties") and 30 percent by Sunrise. As part of the new venture agreement with CNL Lifestyle Properties, from the start of year four to the end of year six, Sunrise will have a buyout option to purchase CNL Lifestyle Properties' 70 percent interest in the venture for a purchase price that provides a 16 percent internal rate of return to them. In addition, the new venture modified the existing mortgage loan in the amount of $133.2 million to provide for, among other things, (i) pay down of the loan by approximately $28.7 million and (ii) an extension of the maturity date of the loan to April 2014 which may be extended by two additional years under certain conditions. In connection with the transaction, Sunrise contributed $8.1 million and CNL Lifestyle Properties contributed $19.0 million to the new venture.

General and Administrative Expenses

In connection with the Company's ongoing efforts to reduce its general and administrative expenses, Sunrise eliminated 27 positions during the quarter ended September 30, 2011 and incurred $2.1 million of severance costs associated with these terminations. Further, during the quarter ended September 30, 2011, Sunrise's general and administrative expenses included $1.1 million in professional expenses associated with its previously announced transactions.

Operating Data for Third Quarter 2011

Average unit occupancy for total stabilized properties for the third quarter of 2011 was 87.9 percent, which was up 10 basis points from 87.8 percent for the third quarter of 2010, and up 10 basis points sequentially compared to 87.8 percent for the second quarter of 2011.

Average daily revenue per occupied unit for total stabilized properties increased 5.0 percent from $201.53 for the third quarter of 2010 to $211.52 for the third quarter of 2011.

Total stabilized property net operating income increased 4.3 percent from $128.2 million for the third quarter of 2010 to $133.7 million for the third quarter of 2011. Overall, net operating income including lease up properties increased 9.2 percent from the third quarter of 2010 to the third quarter of 2011.

Stabilized properties are single properties or pools of properties owned or leased by Sunrise or owned by a joint venture where the single property or all of the communities in the pool have been open and operating for more than 36 months as of September 30, 2011. This differs from Sunrise's "comparable community" definition which defines comparable at the individual community level as having been open and operating as of January 1, 2009.

Venture Transaction – Subsequent to Quarter End

In October 2011, Sunrise and its venture partner in a portfolio of seven communities transferred ownership of the portfolio to a new joint venture owned approximately 68% by CNL Income Partners, LP, a subsidiary of CNL Lifestyle Properties and approximately 32% by Sunrise. In connection with the transaction, Sunrise transferred its interest in the previous joint venture valued at approximately $16.7 million and CNL Lifestyle Properties contributed approximately $35.4 million. The purchase was also funded by $120.0 million of new debt financing in the venture. Sunrise has the option to buy out CNL Lifestyle Properties' interest from the start of year four to the end of year six for a purchase price that provides a 13% internal rate of return to them.

Supplemental Information

For additional details on Sunrise's stabilized and lease up properties, please refer to the Supplemental Information attached. Also, additional supplemental information has been furnished to the Securities and Exchange Commission in a Form 8-K, and can also be found on the Supplemental Data link on the Investor Relations section of the Company's Web site at http://suppdata.sunriseseniorliving.com/

Conference Call and Webcast

Sunrise will host a conference call and webcast at 9:00 a.m. ET on Tuesday, November 8, 2011, to discuss the financial results for the third quarter of 2011 and the other matters discussed in this press release. The call-in number for the conference call is 888-747-4626 or 913-981-5568 (from outside the U.S.). Callers should reference the "Sunrise Senior Living Q3 Earnings Call" or the participant passcode: 4405323. Those interested may also go to the Investor Relations section of the Company's website (http://www.sunriseseniorliving.com) to listen to the earnings call. A telephone replay of the call will be available until November 22, 2011 at 1 p.m. ET, by dialing 888-203-1112 or 719-457-0820 (from outside the U.S.) and referencing replay passcode: 4405323; a replay will also be available on Sunrise's website during that period.

About Sunrise Senior Living

Sunrise Senior Living, a McLean, Va.-based company, employs approximately 31,700 people. As of September 30, 2011, Sunrise operated 311 communities located in the United States, Canada and the United Kingdom, with a unit capacity of approximately 30,700 units. Sunrise offers a full range of personalized senior living services, including independent living, assisted living, care for individuals with Alzheimer's and other forms of memory loss, as well as nursing and rehabilitative services. Sunrise's senior living services are delivered by staff trained to encourage the independence, preserve the dignity, enable freedom of choice and protect the privacy of residents. To learn more about Sunrise, please visit http://www.sunriseseniorliving.com.

Forward-Looking Statements

Certain matters discussed in this press release 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 assumptions, there can be no assurances that these expectations will be realized. Sunrise's actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, the risk that we may not be able to successfully execute our plan to sell certain assets mortgaged to our German restructure transaction or the net sale proceeds of the mortgaged North American properties are not sufficient to pay the minimum amount guaranteed by Sunrise to the lenders that are party to the German restructure transactions; the risk that we may be unable to reduce expenses and generate positive operating cash flows; the risk of future obligations to fund guarantees to some of our ventures and lenders to the ventures; the risk of further write-downs or impairments of our assets; the risk that we are unable to obtain waivers, cure or reach agreements with respect to existing or future defaults under our loan, venture and construction agreements; the risk that we will be unable to repay, extend or refinance our indebtedness as it matures, or that we will not comply with loan covenants; the risk that our ventures will be unable to repay, extend or refinance their indebtedness as it matures, or that they will not comply with loan covenants creating a foreclosure risk to our venture interest and a termination risk to our management agreements; the risk that we are unable to continue to recognize income from refinancings and sales of communities by ventures; the risk of declining occupancies in existing communities or slower than expected leasing of newer communities; the risk that we are unable to extend leases on our operating properties at expiration, in some cases, the expiration is as early as 2013; the risk that some of our management agreements, subject to early termination provisions based on various performance measures, could be terminated due to failure to achieve the performance measures; the risk that our management agreements can be terminated in certain circumstances due to our failure to comply with the terms of the management agreements or to fulfill our obligations thereunder; the risk that ownership of the communities we manage is heavily concentrated in a limited number of business partners; the risk our current and future investments in ventures could be adversely affected by our lack of sole decision-making authority, our reliance on venture partners' financial condition, any disputes that may arise between us and our venture partners and our exposure to potential losses from the actions of our venture partners; the risks from our international operations which are subject to a variety of risks that could adversely affect those operations and thus our profitability and operating results; the risk from competition and our response to pricing and promotional activities of our competitors; the risk of liability claims against us in excess of insurance limits could adversely affect our financial condition and results of operations including publicity surrounding some claims that may damage our reputation, which would not be covered by insurance; the risk of not complying with government regulations; the risk of new legislation or regulatory developments; the risk of changes in interest rates; the risk of unanticipated expenses; the risks of further downturns in general economic conditions including, but not limited to, financial market performance, downturns in the housing market, consumer credit availability, interest rates, inflation, energy prices, unemployment and consumer sentiment about the economy in general; the risks associated with the ownership and operation of assisted living and independent living communities; and other risk factors detailed in our Current Report on Form 8-K filed with the SEC on April 14, 2011, and as may be further amended or supplemented in our Form 10-Q filings. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. Unless the context suggests otherwise, references herein to "Sunrise," the "Company," "we," "us" and "our" mean Sunrise Senior Living, Inc. and our consolidated subsidiaries.

Investor Relations Contact
Tim Smith, 703-854-0348

Media Contact
Meghan Lublin, 703-854-0299

SUNRISE SENIOR LIVING, INC.
CONSOLIDATED BALANCE SHEETS

				September 30,	December 31,
(In thousands, except per share and share amounts)				2011	2010
ASSETS				(unaudited)
	Current assets:
		Cash and cash equivalents		$ 82,931	$ 66,720
		Accounts receivable, net		41,635	37,484
		Income taxes receivable		2,765	4,532
		Due from unconsolidated communities		15,752	19,135
		Deferred income taxes, net		12,823	20,318
		Restricted cash		48,896	43,355
		Assets held for sale		1,404	1,099
		Prepaid expenses and other current assets		13,925	20,167
			Total current assets	220,131	212,810
	Property and equipment, net			629,028	238,674
	Due from unconsolidated communities			3,868	3,868
	Intangible assets, net			40,359	40,749
	Investments in unconsolidated communities			47,298	38,675
	Restricted cash			103,160	103,334
	Restricted investments in marketable securities			2,349	2,509
	Assets held in the liquidating trust			27,375	50,750
	Other assets, net			12,805	10,089
			Total assets	$ 1,086,373	$ 701,458

LIABILITIES AND EQUITY
	Current liabilities:
		Current maturities of debt		$ 77,491	$ 80,176
		Accounts payable and accrued expenses		144,368	131,904
		Due to unconsolidated communities		745	502
		Deferred revenue		12,285	15,946
		Entrance fees		19,841	30,688
		Self-insurance liabilities		43,073	35,514
			Total current liabilities	297,803	294,730
	Debt, less current maturities			451,950	44,560
	Liquidating trust notes			26,255	38,264
	Investments accounted for under the profit-sharing method			8,570	419
	Self-insurance liabilities			44,997	51,870
	Deferred gains on the sale of real estate and deferred revenues			13,427	16,187
	Deferred income tax liabilities			12,823	20,318
	Interest rate swap, at fair value			22,387	0
	Other long-term liabilities, net			107,691	110,553
			Total liabilities	985,903	576,901
	Equity:
		Preferred stock, $0.01 par value, 10,000,000 shares authorized,
			no shares issued and outstanding	0	0
		Common stock, $0.01 par value, 120,000,000 shares authorized, 57,660,276 and
			56,453,192 shares issued and outstanding, net of 451,238 and 428,026 treasury shares,
			at September 30, 2011 and December 31, 2010, respectively	577	565
		Additional paid-in capital		485,737	478,605
		Retained loss		(387,065)	(361,904)
		Accumulated other comprehensive (loss) income		(4,066)	2,885
			Total stockholders’ equity	95,183	120,151
	Noncontrolling interests			5,287	4,406
			Total equity	100,470	124,557
			Total liabilities and equity	$ 1,086,373	$ 701,458

SUNRISE SENIOR LIVING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

					Three Months Ended		Nine Months Ended
					September 30,		September 30,
(In thousands, except per share amounts)					2011	2010	2011	2010
					(Unaudited)		(Unaudited)
Operating revenue:
	Management fees				$ 23,496	$ 28,663	$ 72,110	$ 81,433
	Buyout fees				3,044	40,000	3,044	53,471
	Resident fees for consolidated communities				126,179	88,655	339,161	263,780
	Ancillary fees				7,641	11,113	22,751	32,535
	Professional fees from development, marketing and other				553	847	1,398	3,539
	Reimbursed costs incurred on behalf of managed communities				179,038	212,386	543,168	648,479
		Total operating revenues			339,951	381,664	981,632	1,083,237
Operating expenses:
	Community expense for consolidated communities				91,819	64,881	245,030	194,991
	Community lease expense				19,476	15,384	57,281	45,023
	Depreciation and amortization				10,728	11,997	26,752	28,879
	Ancillary expenses				7,127	10,558	21,099	30,504
	General and administrative				28,263	31,235	88,216	92,850
	Carrying costs of liquidating trust assets				658	551	1,700	1,790
	Accounting Restatement, Special Independent Committee inquiry,
		SEC investigation and stockholder litigation			0	314	0	673
	Restructuring costs				0	1,061	0	10,885
	Provision for doubtful accounts				1,028	1,535	2,552	3,613
	Impairment of long-lived assets				2,899	1,014	8,254	4,373
	Loss (gain) on financial guarantees and other contracts				0	167	(12)	477
	Costs incurred on behalf of managed communities				180,275	216,713	545,953	651,854
		Total operating expenses			342,273	355,410	996,825	1,065,912
			(Loss) income from operations		(2,322)	26,254	(15,193)	17,325
Other non-operating income (expense):
	Interest income				705	339	1,868	949
	Interest expense				(6,207)	(1,893)	(12,047)	(6,131)
	Gain on investments				0	663	0	1,310
	Gain on fair value of pre-existing equity interest from a business combination				0	0	11,250	0
	Gain on fair value of liquidating trust note				0	108	88	1,221
	Other (expense) income				(2,590)	373	(2,618)	(862)
		Total other non-operating expense			(8,092)	(410)	(1,459)	(3,513)
Gain on the sale and development of real estate and equity interests					727	653	3,817	2,863
Sunrise’s share of earnings (loss) and return on investment
	in unconsolidated communities				5,304	(848)	(1,454)	(3,189)
Loss from investments accounted for under the profit-sharing method					(2,096)	(5,692)	(6,860)	(10,469)
			(Loss) income before provision for income
				taxes and discontinued operations	(6,479)	19,957	(21,149)	3,017
Provision for income taxes					(72)	(79)	(1,575)	(1,197)
			(Loss) income before discontinued operations		(6,551)	19,878	(22,724)	1,820
Discontinued operations, net of tax					(1,776)	(726)	(1,029)	48,623
			Net (loss) income		(8,327)	19,152	(23,753)	50,443
				Less: Net income attributable to noncontrolling interests	(407)	(409)	(1,408)	(1,389)
			Net (loss) income attributable to common shareholders		$ (8,734)	$ 18,743	$ (25,161)	$ 49,054

Earnings per share data:
	Basic net (loss) income per common share
		(Loss) income before discontinued operations			$ (0.12)	$ 0.35	$ (0.42)	$ 0.01
		Discontinued operations, net of tax			(0.03)	(0.01)	(0.02)	0.87
			Net (loss) income		$ (0.15)	$ 0.34	$ (0.44)	$ 0.88

	Diluted net (loss) income per common share
		(Loss) income before discontinued operations			$ (0.12)	$ 0.34	$ (0.42)	$ 0.01
		Discontinued operations, net of tax			(0.03)	(0.01)	(0.02)	0.85
			Net (loss) income		$ (0.15)	$ 0.33	$ (0.44)	$ 0.86

SUNRISE SENIOR LIVING, INC.
Reconciliation For EBITDA, Adjusted EBITDA, and Adjusted EBITDAR

*EBITDA, Adjusted EBITDA, and Adjusted EBITDAR*

EBITDA, adjusted EBITDA, and adjusted EBITDAR are measures of operating performance that are not calculated in accordance with U.S.
generally accepted accounting principles and should not be considered as a substitute for income/loss from operations or net income/loss.
EBITDA, adjusted EBITDA, and adjusted EBITDAR are used by management to focus on performance and liquidity as EBITDA
excludes depreciation and amortization, interest income, interest expense, and provision for income taxes. Adjusted EBITDA
further excludes accounting restatement, special independent committee inquiry, SEC investigation, stockholder litigation, buyout fees,
restructuring costs, write-off of capitalized project costs, allowance for uncollectible receivables from owners, impairment of long-lived assets,
gain on investments, other income (expense), stock compensation, gain on the sale and development of real estate and equity interests,
proportionate share of joint venture interest, taxes, depreciation, and amortization, loss from investments accounted for under the
profit-sharing method, and discontinued operations (net of tax). Adjusted EBITDAR further excludes consolidated community lease
expense and our share of lease expense from consolidated New York communities leased from a venture.

The following table reconciles adjusted EBITDA and adjusted EBITDAR to net income (loss) attributable to common shareholders (in millions):

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2011	2010	2011	2010

Net (loss) income attributable to common shareholders	$ (8.7)	$ 18.7	$ (25.2)	$ 49.1
Depreciation and amortization	10.7	12.0	26.8	28.9
Interest income	(0.7)	(0.3)	(1.9)	(0.9)
Interest expense	6.2	1.9	12.0	6.1
Provision for income taxes	0.1	0.1	1.6	1.2
EBITDA	7.6	32.4	13.3	84.4
Accounting Restatement, Special Independent Committee inquiry,
SEC investigation and stockholder litigation	-	0.3	-	0.7
Buyout Fees	(3.0)	(40.0)	(3.0)	(53.5)
Restructuring costs	-	1.1	-	10.9
Allowance for uncollectible receivables from owners	0.3	1.5	1.2	2.9
Impairment of long-lived assets	2.9	1.0	8.3	4.4
(Gain) loss on financial guarantees and other contracts	-	0.2	(0.0)	0.5
Gain on investments	-	(0.7)	-	(1.3)
Gain on fair value of pre-existing equity interest from a business combination	-	-	(11.3)	-
Gain on fair value of liquidating trust note	-	(0.1)	(0.1)	(1.2)
Other expense	2.6	(0.4)	2.6	0.9
Stock compensation	2.2	0.9	5.9	3.3
Gain on the sale and development of real estate and equity interests	(0.7)	(0.7)	(3.8)	(2.9)
Proportionate Share of Joint Venture Interest, Taxes, Transaction Costs, Depr., and Amort.,
net of equity in earnings	4.3	14.5	33.4	39.7
Loss from investments accounted for under the profit-sharing method	2.1	5.7	6.9	10.5
Discontinued operations, net of tax	1.8	0.7	1.0	(48.6)
Adjusted EBITDA	$ 20.1	$ 16.4	$ 54.4	$ 50.7
Consolidated Community Lease Expense	15.2	15.4	44.9	45.0
Lease expense from Consolidated New York communities leased from a venture (Sunrise share)	1.7	-	4.9
Adjusted EBITDAR	$ 37.0	$ 31.8	$ 104.2	$ 95.7

Footnotes:
In connection with the Company’s ongoing efforts to reduce its general and administrative expenses, Sunrise eliminated 27 positions during the
quarter ended September 30, 2011 and incurred $2.1 million of severance costs associated with these terminations. Further, during the quarter ended
September 30, 2011, Sunrise’s general and administrative expenses included $1.1 million in professional expenses associated with its previously
announced venture transactions.

Sunrise Senior Living
Community Data
Ownership Type


Stabilized Properties (2)			Unit Occupancy				Net Operating Income (1)				Revenue per Occupied Unit
			Three Months Ended		Nine Months Ended		Three Months Ended		Nine Months Ended		Three Months Ended
			September 30,		September 30,		September 30,		September 30,		September 30,
Ownership Type	Comm.	Units	2011	2010	2011	2010	2011	2010	2011	2010	2011	2010
Consolidated (4)	23	2,103	86.2%	83.1%	84.8%	82.6%	$ 11,047,836	$ 10,990,335	$ 33,086,717	$ 32,091,367	$ 217.96	$ 211.51
Leased (4)	26	5,675	88.2%	89.2%	88.4%	89.0%	18,201,096	20,514,833	59,717,004	59,452,546	166.29	156.23
Joint Ventures-US	75	5,577	87.9%	87.5%	87.9%	86.2%	31,398,502	29,571,627	93,884,017	84,349,301	232.64	223.56
Joint Ventures-UK	5	434	91.8%	90.2%	92.4%	89.6%	4,140,027	3,832,552	11,866,183	11,072,172	309.86	299.48
Managed	142	13,142	88.0%	88.0%	87.7%	87.5%	68,919,318	63,247,712	200,318,388	185,960,832	217.77	207.22
Total Stabilized	271	26,931	87.9%	87.8%	87.8%	87.2%	$ 133,706,779	$ 128,157,059	$ 398,872,309	$ 372,926,218	211.52	201.53

Lease-Up Properties (3)			Unit Occupancy				Net Operating Income (1)				Revenue per Occupied Unit
			Three Months Ended		Nine Months Ended		Three Months Ended		Nine Months Ended		Three Months Ended
			September 30,		September 30,		September 30,		September 30,		September 30,
Ownership Type	Comm.	Units	2011	2010	2011	2010	2011	2010	2011	2010	2011	2010
Consolidated (4)	1	99	61.4%	60.1%	61.2%	58.4%	$ 277,423	$ 191,013	$ 905,510	$ 792,844	$ 245.91	$ 239.46
Joint Ventures-US	17	1,862	70.1%	55.5%	66.5%	49.6%	6,350,786	2,718,438	16,370,475	3,715,417	219.22	216.56
Joint Ventures-UK	22	1,831	87.2%	76.9%	85.2%	72.9%	14,691,193	10,957,535	38,446,131	29,749,646	300.41	289.53
Total Lease Up	40	3,792	78.1%	65.9%	75.4%	61.1%	$ 21,319,402	$ 13,866,986	$ 55,722,116	$ 34,257,907	263.52	258.17

Total Properties			Unit Occupancy				Net Operating Income (1)				Revenue per Occupied Unit
			Three Months Ended		Nine Months Ended		Three Months Ended		Nine Months Ended		Three Months Ended
			September 30,		September 30,		September 30,		September 30,		September 30,
Ownership Type	Comm.	Units	2011	2010	2011	2010	2011	2010	2011	2010	2011	2010
Consolidated (4)	24	2,202	85.0%	82.0%	83.7%	81.5%	$ 11,325,260	$ 11,181,347	$ 33,992,227	$ 32,884,211	$ 218.87	$ 212.43
Leased (4)	26	5,675	88.2%	89.2%	88.4%	89.0%	18,201,096	20,514,833	59,717,004	59,452,546	166.29	156.23
Joint Ventures-US	92	7,439	83.4%	79.5%	82.6%	77.1%	37,749,288	32,290,065	110,254,492	88,064,718	229.82	222.34
Joint Ventures-UK	27	2,265	88.1%	79.4%	86.6%	76.1%	18,831,220	14,790,087	50,312,314	40,821,818	302.30	291.69
Managed	142	13,142	88.0%	88.0%	87.7%	87.5%	68,919,318	63,247,712	200,318,388	185,960,832	217.77	207.22
Total Properties	311	30,723	86.7%	85.1%	86.2%	84.0%	$ 155,026,181	$ 142,024,044	$ 454,594,425	$ 407,184,125	217.30	206.95

Footnotes:
(1) Net operating income from consolidated and leased communities is not reduced by allocated management fees as we eliminate management fees from
consolidated and leased communities.
(2) Stabilized properties are single properties or pools of properties owned or leased by us or owned by a joint venture where the single property or all of the
communities in the pool have been open and operating for more than 36 months as of September 30, 2011. This differs from our "comparable community" definition which
defines comparable at the individual community level as having been open and operating as of January 1, 2009. All managed communities are stabilized properties.
(3) Lease-up properties are single properties or pools of properties owned or leased by us or owned by a joint venture where the single property or any of the
communities in the pool have been open and operating for less than 36 months as of September 30, 2011.
(4) Net operating income is a non-GAAP measure. Our nearest GAAP measure on our consolidated statement of operations is income/(loss) from operations.
Net operating income excludes depreciation, amortization, lease expense, and impairment charges from these communities. On page 7 of the supplemental tables
please refer to a complete reconciliation of net operating income to income/(loss) from operations.