In short, America is rapidly graying…
and we’re looking for green with an
assisted-care provider play. Over the river and
through the woods to
grandmother’s assisted
living apartment we go In many countries, elders are highly revered and their offspring fight for the
honor of caring for them in their homes
when they are no longer able to live inde-
pendently. In fact, the Chinese don’t typi-
cally begin to celebrate birthdays until
they reach the age of 60!        Here in America, however, the push to
exile the elderly to senior communities
and nursing homes is rampant. Running
from school to soccer practice to ballet
recitals, most moms can’t fit caring for
grandma into the daily scheme.
Additionally, today’s seniors typically
have about 40% more funds to work with
than their parents did and can afford
these often pricey communities. And
many seniors aren’t complaining. Today’s
senior communities come loaded with
plush apartments, gourmet dining facili-
ties and recreational activities to the max.        Assisted living communities have
emerged as the most popular form of
senior facilities, experiencing an estimat-
ed 15% to 20% growth over the last few
years. More than 600,000 residents
nationwide have chosen the assisted liv-
ing route, because it combines the best
of both worlds: seniors live in their own
apartments and have plenty of freedom
to perform the daily tasks they can man-
age, but still receive help with those they
can’t. Assisted-living care is the perfect
solution for the elderly who cannot live
entirely on their own anymore but don’t
require twenty-four-hour medical care. The sun rises on seniors Though there are many publicly trad- ed companies associated with assisted
living and senior nursing homes, we see
the most growth potential in Sunrise Senior Living Inc. (SRZ:NYSE). This Virginia-based senior living company
operates more than 200 communities in the US, Canada and Britain, and has
emerged as a leader in the business.        Sunrise Senior Living, formerly
Sunrise Assisted Living, has switched
gears over the past few years from own-
ing properties to simply managing and
operating them.        Their plan to sell all underlying real
estate and instead sign long-term con-
tracts to manage senior facilities was
intended to reduce debt levels and
stabilize earnings. And that they have.
With about US$180 million in cash,
Sunrise’s income rose 36% in the first
three quarters of 2003. Having already
sold US$1.6 billion in real estate, Sunrise
is looking to unload its US$400 million in
remaining properties.        Sunrise experienced a big year in 2003.
In April, the company acquired Marriott’s
Senior Living Services sector of 126 com-
munities with a 23,000 resident capacity.
This deal doubled Sunrise’s holdings and
helped their stock grow 56% in 2003, from
US$25 to US$39. In addition, Sunrise also
struck a deal to manage 22 EdenCare sen-
ior communities. A growing stock in
a growth market With a P/E under 15 and an impressive PEG of 0.95, Sunrise has good fundamen-
tals and long-term potential. Don’t let
Legg Mason’s recent downgrade fool
you: Sunrise is still an excellent growth
play and was downgraded solely for its
valuation levels, which were in danger of
becoming overpriced.        Skeptics worry that the booming
assisted-living sector will fall victim to
another Internet-like bubble, which it did
in the late 90’s. But we believe that the
slight dip that Sunrise has experienced at
the beginning of 2004 is a perfect buying
opportunity. Future earnings growth is
projected at 15%, and the stock could
reasonably reach upwards of US$48 if
these goals are met. New services and
third-party management deals are also in
the works for 2004. Play on the “geezerization” of America and buy shares of Sunrise
Senior Living (SRZ:NYSE) at the market
today. 12 Hotline: 410 528 8228 TAIPAN Publisher:
J. Christoph Amberger Editors:    Christian DeHaemer,
Brian Hicks, Siu-Yee Ng,
Briton L. Ryle, Adam T. Lass,
Bryan Bottarelli, Ian Cooper,
William Colburn, Martin
Denholm, Ann Sosnowski,
Erin Beale Managing Editor:
Ned Humphrey Art:   Elliana Brocato Fulfillment:   Alex Ferguson Tours and Conferences:
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Call (508) 368-7498
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