Sunrise Senior Living Announces Agreement to Acquire Greystone Communi

MCLEAN, Va., May 2 /PRNewswire-FirstCall/ -- Sunrise Senior Living, Inc. , today announced that it has signed a definitive agreement to acquire Greystone Communities Inc. and certain of its subsidiaries and affiliated entities (collectively, Greystone), a premier developer and manager of Continuing Care Retirement Communities (CCRCs). Through this acquisition, Sunrise will be expanding into the largest segment of the CCRC industry -- the not-for-profit sector. The acquisition of Greystone will include management of 14 operating CCRCs (capacity for over 4,000 residents), pre-opening and ongoing management of 17 communities (capacity for 4,000 additional residents) that Greystone has under development for clients, as well as various other consulting and marketing agreements. Sunrise will not acquire any real estate in this transaction.

Greystone is the 18th largest senior housing manager in the United States(1) and through its subsidiaries and affiliated entities manages communities in nine states (summary information regarding Greystone's communities is included in a supplement to this press release). Founded in 1982 and headquartered in Irving, Texas, Greystone offers a broad range of services to its senior living community clients including corporate strategic planning, project planning, development, resident marketing, capital acquisition and pre-opening and operations management services. Greystone has been engaged to develop or expand approximately 75 senior living communities involving more than $3.5 billion in tax-exempt revenue bond financings across the country. Greystone also has worked with a number of clients to re-develop older communities and to improve the financial performance of existing communities.

Following the closing of this transaction, which is expected to occur as soon as closing conditions can be satisfied and prior to June 30, 2005, Greystone will operate as a division of Sunrise under the continued leadership of existing Greystone senior management. The founders of Greystone, Michael Lanahan and Paul Steinhoff, as well as Greystone President Mark Andrews and Executive Vice President John Spooner will enter into employment agreements with four-year terms with Sunrise effective as of closing. The not-for-profit CCRC market is one of the largest segments of the senior living industry and Sunrise believes that the combination of Greystone's leading management services presence in the not-for-profit CCRC market and Sunrise's capital strength and additional resident care programs and management services depth can lead to substantial growth for Sunrise in the not-for-profit market.

"This acquisition will further establish Sunrise as a leading CCRC operator," said Paul Klaassen, chairman and CEO of Sunrise Senior Living. "Greystone is a first-class organization and its presence as a leader in the large and growing not-for-profit CCRC business allows Sunrise to immediately expand into that sector, which should enhance our future growth."

Greystone-developed communities are typically full-service CCRCs offering a mix of independent living, assisted living, Alzheimer's care and skilled nursing care (campus sizes range from 55 to 502 units with an average of 258 units per campus). Historically, Greystone's management contracts generally have been fixed-fee contracts with an average length of approximately five to seven years due to the tax-exempt financing utilized to construct the communities. Since Greystone's typical management contracts are fixed-fee contracts, Sunrise does not expect to include their revenues under management in the quarterly disclosures Sunrise makes with respect to revenues under management of communities managed by Sunrise.

The aggregate purchase price for the Greystone transaction is estimated to be $45 million plus approximately $1 million in transaction costs, representing approximately seven times Greystone's anticipated 2005 net income before taxes. Sunrise also will pay an additional $7.5 million if Greystone meets certain performance milestones in 2005, 2006 and 2007 for a total potential purchase price of $52.5 million, plus transaction costs, subject to various adjustments set forth in the acquisition agreement. Sunrise expects to fund the acquisition through its existing cash balances and corporate credit facility.

Sunrise expects to incur approximately $1 million in one-time transition expenses in 2005 related to the Greystone acquisition, but still believes the transaction will be slightly accretive in 2005 with additional accretion in 2006. Sunrise is maintaining its current full-year 2005 earnings per share guidance ($1.82 to $1.92), which excludes income from property sales and one-time transition expenses relating to the Greystone transaction (approximately $1 million) and the previously announced and pending Fountains acquisition transaction (approximately $3.3 million).

Sunrise expects to update its 2005 annual earnings per share guidance upon closing of the Fountains acquisition. As is customary, Sunrise will provide 2006 earnings per share guidance upon the release of its third-quarter 2005 financial results.

Sunrise Senior Living is the nation's largest provider of senior living services. The McLean, Va.-based Company employs more than 35,000 people. As of March 31, 2005, Sunrise operated 384 communities in the United States, Canada, Germany and the United Kingdom with a combined capacity for more than 43,600 residents. Sunrise also had 33 communities under construction in these countries with a combined capacity for approximately 3,100 residents. 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 care. 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/.

Estimates of future earnings are by definition, and certain other 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 its 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, our ability to successfully complete The Fountains and Greystone transactions and integrate them into our operations, development and construction risks, acquisition risks, licensing risks, business conditions, competition, changes in interest rates, our ability to manage our expenses, market factors that could affect the value of our properties, the risks of downturns in general economic conditions, satisfaction of closing conditions and availability of financing for development and acquisitions. These and other risks are detailed in the Company's annual report on Form 10-K filed with the Securities and Exchange Commission. The Company assumes no obligation to update or supplement forward- looking statements that become untrue because of subsequent events.

Sunrise Senior Living Supplemental Information Resident Capacity Company Sunrise 43,636 Fountains (units) 4,866 Greystone (units) 4,042 Total (pro forma combined) 52,544 Product Capacity Property Type Pro Forma (Resident Capacity) Sunrise* % Fountains Greystone Combined** % Independent Living 9,405 22% 2,769 2,913 15,087 29% Assisted Living 30,711 70% 1,318 541 32,570 62% Skilled Nursing 3,520 8% 779 588 4,887 9% Total 43,636 100% 4,866 4,042 52,544 100% Pro Forma Property Type Sunrise* Fountains Greystone Combined** Percent Communities - Managed 194 1 14 209 50% Communities - Joint Venture 130 17 0 147 35% Communities - Consolidated 60 1 0 61 15% Total 384 19 14 417 100% * As of 3/31/05 ** Based on proposed Fountains and Greystone transactions. Greystone's Property Locations by State State Properties Florida 4 Indiana 2 Texas 2 Arizona 1 Alabama 1 Hawaii * 1 Nevada * 1 New York 1 West Virginia * 1 * New states for Sunrise Senior Living, Inc. (1) Source: American Senior Housing Association. "50 Largest U.S. Seniors Housing Managers as of July 1, 2004." National Real Estate Investor. October 2004: A4.