Health Care Property Investors, Inc. (HCP)

[ScovilleUnits]

HCP Initiates Litigation against Sunrise Senior Living

Monday , June 29, 2009 16:05ET

LONG BEACH, Calif., Jun 29, 2009 (BUSINESS WIRE) -- HCP (NYSE:HCP) announced that it, together with three of its tenants, has filed complaints against Sunrise Senior Living, Inc. and its subsidiaries ("Sunrise") based on Sunrise's defaults under management and related agreements covering 64 HCP-owned properties operated by Sunrise. The complaints, filed in the Delaware Chancery Court on June 29, 2009, allege, among other things, that Sunrise systematically breached various contractual and fiduciary duties, including operating the properties in a manner that impermissibly favored the interests of Sunrise and its affiliates at the expense of HCP and its tenants. In addition to equitable relief and money damages relating to the defaults, HCP and its tenants are seeking judicial confirmation of rights to terminate the agreements on the 64 properties.

HCP became the owner of 101 senior housing communities operated by Sunrise through its 2006 acquisition of CNL Retirement Properties, Inc. As previously disclosed, HCP transitioned 11 of those communities to a new operator in December 2008, and shortly thereafter notified Sunrise that it was in default of its obligations under the agreements for the remaining 90 communities. Sunrise responded to HCP's default notices by denying that it was in violation of its agreements in any material respect. The agreements provide Sunrise with various periods to cure the defaults, which periods have now expired. More recently, HCP announced that the management agreements on 15 additional Sunrise-managed communities were terminated effective October 1, 2009.

http://www.knobias.com/story.htm?eid=3.1.a5867d867ac911c5abff1108dc702ae138d2f3574ae5ce3705774c8cd621da97

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Sunrise Responds to HCP Announcement

Monday , June 29, 2009 17:55ET

Believes Litigation is without Merit; Continues Management of 75 HCP Communities

MCLEAN, Va., June 29 /PRNewswire-FirstCall/ -- Sunrise Senior Living, Inc. (NYSE: SRZ) learned today that HCP has filed complaints against Sunrise and certain of its subsidiaries in the Delaware Chancery Court alleging a variety of breaches of contract and certain fiduciary duty with respect to 64 HCP-owned communities managed by Sunrise.

"HCP purchased these communities under long-term management contracts with many years remaining. The communities have steadily improved their performance yet HCP has continually expressed their desire to terminate their agreements," said Mark Ordan, Sunrise's chief executive officer. "We see today's announcement as just another attempt to unlawfully terminate our agreements and we will enforce our rights vigorously on behalf of all Sunrise stakeholders. We are proud of the care and service we deliver to all of our residents and families, and we look forward to continuing to serve these communities."

The majority of Sunrise's management agreements with HCP have expiration dates ranging from 2028 to 2038 and include extension options held by Sunrise.