Sunrise anticipates non-compliance with loan covenants in fourth quarter

By Sara Rosenberg

New York, Oct. 31 - Sunrise Senior Living Inc. expects to be unable to comply with covenants under its credit facility at the end of the fourth quarter, according to a news release.

The company said that it is working closely with its banks and other sources of capital to provide additional sources of liquidity.

In addition, the company announced on Friday that its previously disclosed transaction between an affiliate of Arcapita Inc. and Health Care REIT, under which Health Care REIT would have purchased a 90% interest in a venture owning 29 senior housing properties managed by Sunrise, has been terminated.

The termination of the transaction will have no impact on Sunrise's 10% interest in the venture, but the company will not receive the estimated cash distributions of about $50 million to $60 million and will not realize the estimated gain of about $41 million to $51 million in the fourth quarter that was anticipated in connection with the transaction.

The agreement was terminated because of market conditions.

Sunrise Senior Living is a McLean, Va.-based operator of senior living communities.

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