With a cup of Starbucks coffee in one hand and his BlackBerry cell phone in the other, Paul Klaassen settles into a chair to enjoy a much-needed moment of peace. After taking a swig of his coffee and stealing a quick glance at his phone, the founder, chairman, and CEO of Sunrise Senior Living begins to tell the story of how he and his wife, Terry, sold their townhouse and used the money to start Sunrise Assisted Living – a business that now numbers close to 350 properties worldwide.
Neither of the Klaassens have had much time for reflection lately. In addition to continuing an aggressive growth strategy that has had Sunrise opening about 25 new communities per year during the past seven years, the company recently bought Marriott Senior Living Services from Marriott International Inc., in Bethesda, Md. The 126 Marriott communities give Sunrise a resident apacity of 40,000 and further diversifies Sunrise's holdings by bringing more independent living and skilled nursing into their solid base of assisted living facilities. The company's units are now comprised of 68 percent assisted living, 22 percent independent living, and 10 percent skilled nursing. The McLean, Va.-based company recently changed its name to Sunrise Senior Living to more accurately reflect this range of services.
The Marriott purchase gives Sunrise 2.4 percent of the senior living market. It seems small, but it is large enough to make it the largest operator in this fragmented sector, which is littered with nonprofit organizations and small, independent operators. "This deal takes them to another level with their presence and ability to have an impact on this industry," says Bill MacDonald, senior vice president and commercial market executive for the Mid-Atlantic region of Bank of America, Sunrise's primary bank. This will not be the end of Sunrise's growth, though. The company would like to grow at a rate of 15 percent over the next few years, according to Dave Faeder, former president and current vice chairman of the company.
The deal is yet another step in a bigger initiative for the company – it is moving from owning and managing its facilities to just managing them. Sunrise is in the process of selling the majority ownership interest in all of its properties, and all new developments will be done with partners that own the majority of the real estate. The company says this philosophy change will help it gain favor with Wall Street, while allowing it to focus on what it does best – manage senior living.
