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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
    Washington, D.C. 20549
    FORM 10-K
  ANNUAL
    REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
  For the
    fiscal year ended December 31, 2008
  Commission
    File Number 1-16499
  SUNRISE
    SENIOR LIVING, INC.
   Delaware

54-1746596(State or other jurisdiction
    incorporation or organization)

(I.R.S. Employer
    Identification No.)7902 Westpark Drive
    McLean, VA

22102(Address of principal
    executive offices)

(Zip Code)   (703) 273-7500
    Title of Each Class

Name of Each Exchange on Which RegisteredCommon stock, $.01 par value per share

New York Stock Exchange     o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer þ

Accelerated
    filer o

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





TABLE OF
    CONTENTS
   
 PagePART IItem 1


Business


4Item 1A.


Risk Factors


21Item 1B.


Unresolved Staff Comments


37Item 2.


Properties


37Item 3.


Legal Proceedings


37Item 4.


Submission of Matters to a Vote of Security
    Holders


41PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


43Item 6.


Selected Financial Data


44Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


45Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


78Item 8.


Financial Statements and Supplementary Data


79Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


144Item 9A.


Controls and Procedures


144Item 9B.


Other Information


147PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


148Item 11.


Executive Compensation


148Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


148Item 13.


Certain Relationships and Related Transactions
    and Director Independence


148Item 14.


Principal Accountant Fees and Services


148PART IVItem 15.


Exhibits and Financial Statement Schedules


149SIGNATURES









150EX-10.17EX-10.18EX-10.19EX-10.45EX-21EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   2




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This Annual Report on
    Form 10-K
    contains forward-looking statements that involve risks and
    uncertainties. Although we believe the expectations reflected in
    such forward-looking statements are based on reasonable
    assumptions, there can be no assurance that our expectations
    will be realized. Our actual results could differ materially
    from those anticipated in these forward-looking statements as a
    result of various factors, including, but not limited to:
  
    changes in our anticipated cash flow and liquidity;
    our ability to maintain adequate liquidity to operate our
    business and execute our restructuring;
    our ability to raise funds from capital sources;
    our ability to comply with the terms of our Bank Credit
    Facility and the amendments to it or to obtain any necessary
    further extension of the waivers for compliance with the
    financial covenants;
    our ability to obtain waivers, cure or reach agreements with
    respect to defaults under our loan, joint venture and
    construction agreements;
    our ability to negotiate a comprehensive restructuring of our
    obligations in respect of our Germany communities, our Fountains
    portfolio and certain of our other ventures;
    business conditions and market factors that could affect the
    value of our properties;
    the outcome of the U.S. Securities and Exchange
    Commissions (SEC) investigation;
    the outcomes of pending putative class action and
    shareholders derivative litigation;
    the outcome of the Trinity investigation by the Office of the
    Inspector General of the Department of Health and Human Services
    (OIG) and qui tam lawsuit relating to Trinity in
    which we are a defendant;
    the outcome of the IRS audit of our tax returns for the tax
    years ended December 31, 2005, 2006 and 2007;
    the ability of our Greystone subsidiary to continue to
    provide development services in the absence of liquid bond
    financing markets;
    the risk of loss of our seed capital investments with our
    Greystone subsidiary if we fail to fund further seed capital
    requirements;
    our ability to continue to recognize income from refinancings
    and sales of communities by ventures;
    risk of changes in our critical accounting estimates;
    risk of further write-downs or impairments of our assets;
    risk of future obligations to fund guarantees and other
    support arrangements to some of our ventures, lenders to the
    ventures or third party owners;
    risk of declining occupancies in existing communities or
    slower than expected leasing of new communities;
    risk resulting from any international expansion;
    development and construction risks;
    risks associated with past or any future acquisitions;
    our ability to achieve anticipated savings from our cost
    reduction program;
    our ability to comply with government regulations;
    risk of new legislation or regulatory developments;
    competition and our response to pricing and promotional
    activities of our competitors;
    changes in interest rates;
    unanticipated expenses;
    the downturns in general economic conditions including, but
    not limited to, financial market performance, consumer credit
    availability, interest rates, inflation, energy prices,
    unemployment and consumer sentiment about the economy in
    general;
    risks associated with the ownership and operation of assisted
    living and independent living communities; and
    other risk factors contained in this
    Form 10-K.  We assume no obligation to update or supplement
    forward-looking statements that become untrue because of
    subsequent events. Unless the context suggests otherwise,
    references herein to Sunrise, the
    Company, we, us and
    our mean Sunrise Senior Living, Inc. and our
    consolidated subsidiaries.
 3




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PART I Item 1. Business  Overview
        Significant
    2008 and 2009 Developments
  Overall
    Condition and Strategy
      Bank Credit Facility

$
95,000Mortgage debt on wholly-owned properties


246,948Land loans


37,407Debt of variable interest entity in New Jersey


23,905German communities debt


185,901Other


46,970Total

$
636,131  4




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
    Impairment of goodwill of $121.8 million;
    Write-off of abandoned development projects of $95.8 million;
    Extraordinary loss due to consolidation of our German venture of
    $22.1 million;
    Impairment of owned communities and undeveloped land of
    $36.5 million; and
    Depreciation and amortization of $51.3 million.       5




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Bank
    Credit Facility
      Germany
    Venture
       6




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Form 8-K,
  Consolidation of Variable Interest Entities
  Trinity
    Qui Tam
 7




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Development
    Ventures
  lease-up
      Abandonment
    of Development Projects
    Greystone
   8




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Our
    G&A and Community Operating Costs
    Aston
    Gardens
      Fountains
    Venture
     9




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Impairment
    of Goodwill and Intangible Assets
    Management
    Contract Termination
    Agreements
    with Marriott International, Inc.
    The
    Senior Living Industry
    
    Independent livingis designed to meet the needs of
    seniors who choose to live in an environment surrounded by their
    peers where they receive services such as housekeeping, meals
    and activities, but are not reliant on assistance with
    activities of daily living (for example, bathing, eating and
    dressing), although some residents may contract out for those
    services.
    Assisted livingmeets the needs of seniors who seek
    housing with supportive care and services including assistance
    with activities of daily living, Alzheimers care and other
    services (for example, housekeeping, meals and activities).
    Skilled nursingmeets the needs of seniors whose care
    needs require
    24-hour
    skilled nursing services or who are receiving rehabilitative
    services following an adverse event (for example, a broken hip
    or stroke).     10




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Senior
    Living Services
  24-hour
  Assisted
    Living
      Basic
    Assisted Living
    
    assistance with activities of daily living, such as eating,
    bathing, dressing, personal hygiene, and grooming;
    three meals per day served in a common dining room;
    coordination of special diets;
    emergency call systems in each unit;
    transportation to stores and community services;
    assistance with coordination of physician care, physical therapy
    and other medical services;
    health promotion and related programs;
    housekeeping services; and
    social and recreational activities.  Medication
    Management
    Assisted
    Living Extended Levels of Care
   11




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Reminiscence
    Care
    Independent
    Living and Skilled Nursing
    Hospice
    Services
    Other
    Services
    Managed
    Communities
        New
    Community Development
   12




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
    market area demographics;
    market area demand and competitive supply;
    target site characteristics;
    probability of obtaining zoning approvals; and
    the ability to cluster our communities to optimize management
    resources.    Greystone
    Development Activities
          and/or
 13




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2008
    Property Information
      Number of CommunitiesConsolidatedVariable Interest


UnconsolidatedConsolidated


Entities


Ventures


Managed


TotalBeginning number December 31, 2007


61



1



199



174



435Opened (developed by us)


3



1



12



3



19Terminations/Sales


(2
)










(17
)


(19
)Expansion/Other adjustments(1)






8



(8
)






Ending number December 31, 2008


62



10



203



160



435   Total Resident CapacityConsolidatedVariable Interest


UnconsolidatedConsolidated


Entities


Ventures


Managed


TotalBeginning number December 31, 2007


8,312



371



22,340



22,894



53,917Opened (developed by us)


293



110



1,374



783



2,560Terminations/Sales


(65
)










(2,158
)


(2,223
)Expansion/Other adjustments(1)


59



829



(888
)


89



89Ending number December 31, 2008


8,599



1,310



22,826



21,608



54,343    14




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2008
    Operating Communities
  Number of Communities


Total Resident CapacityUnconsolidated








UnconsolidatedLocation

Consolidated


Ventures


Managed


Consolidated


Ventures


ManagedAlabama










1











194Arizona


2



5



1



250



843



386Arkansas










1











167California


8



31



13



909



2,995



1,909Colorado


1



7



3



71



623



479Connecticut


2



1



2



168



102



402District of Columbia


1



1



1



110



190



172Delaware






1











82



Florida


5



8



5



1,687



2,744



1,570Georgia


2



6



9



72



718



827Hawaii










1











392Illinois


1



14



12



334



1,466



1,474Indiana


4







2



279







451Kansas






3



2







268



406Kentucky










2











327Louisiana


1



1



2



91



70



98Maryland


2



2



10



513



233



1,160Maine






1











185



Massachusetts






9



6







699



571Michigan


1



12



3



77



1,376



300Minnesota






4



6







358



566Missouri


1



3



2



76



504



179Nebraska










1











166Nevada






1



2







105



306New Jersey


2



15



11



495



1,311



1,264New Mexico


1











99







New York






15



2







1,499



243North Carolina


2



1



7



166



207



758North Dakota






















Ohio


12



4



4



841



236



410Oklahoma






1



3







291



419Pennsylvania


4



18



1



765



1,582



180South Carolina










5











513Tennessee










1











115Texas


1



4



12



145



434



2,488Utah






2



1







254



164Virginia


7



8



10



1,529



854



890Washington






2



5







226



404West Virginia










1











167Wisconsin










1











192United Kingdom






20











1,937



Germany


9











939







Canada


3



3



9



293



434



899Total


72



203



160



9,909



22,826



21,608  15




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2008
    Communities Under Construction
  Number of Communities


Total Resident CapacityUnconsolidated





UnconsolidatedLocation

Consolidated


Ventures


Consolidated


VenturesAlabama














California


3



2



301



156Colorado






1







243Florida






1







94Georgia






1







93Illinois






1







164Indiana






1







162Kentucky






1







94Louisiana






2







181Maryland






1







83Michigan






1







95New York














North Carolina






1







85Ohio






1







95Pennsylvania






1







94South Carolina














Texas






1







99Washington














United Kingdom






7







687Total


3



23



301



2,425   Company
    Operations
  Operating
    Structure
  Form 10-K
    Senior
    Living Operations
       16




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Community
    Staffing
        Staff
    Education and Training
      Quality
    Improvement Processes
   17




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Sales and
    Marketing
      Greystone
    Operations
          Competition
    Government
    Regulation
  Senior Living.
  
    personnel education, training, and records;
    administration and supervision of medication;
    the provision of limited nursing services;
    admission and discharge criteria; 18




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
    documentation, reporting and disclosure requirements;
    staffing requirements;
    monitoring of resident wellness;
    physical plant specifications;
    furnishing of resident units;
    food and housekeeping services;
    emergency evacuation plans; and
    resident rights and responsibilities.    and/or
  and/or
      Other
 19




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Employees
  Form 10-K,
  Website
  http://www.sunriseseniorliving.com. Form 10-K, Form 10-Q, Form 8-K,
 20




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Item 1A.
    Risk
    Factors  In connection with the safe harbor provisions of the Private
    Securities Litigation Reform Act of 1995, set forth below are
    cautionary statements identifying important factors that could
    cause actual events or results to differ materially from any
    forward-looking statements made by or on behalf of us, whether
    oral or written. We wish to ensure that any forward-looking
    statements are accompanied by meaningful cautionary statements
    in order to maximize to the fullest extent possible the
    protections of the safe harbor established in the Private
    Securities Litigation Reform Act of 1995. Accordingly, any such
    statements are qualified in their entirety by reference to, and
    are accompanied by, the following important factors that could
    cause actual events or results to differ materially from our
    forward-looking statements. If any of the following risks
    actually occur, our business, financial condition or results of
    operations could be negatively affected, and the trading price
    of our common stock could decline.
  These forward-looking statements are based on
    managements present expectations and beliefs about future
    events. As with any projection or forecast, these statements are
    inherently susceptible to uncertainty and changes in
    circumstances. There may be additional risks and uncertainties
    not presently known to us or that we currently deem immaterial
    that also may impair our business operations. You should not
    consider this list to be a complete statement of all potential
    risks or uncertainties.
  We have separated the risks into the following categories:
  
    Liquidity risks relating to our compliance with our credit
    agreements and financial obligations;
    Risks related to our business operations;
    Risks related to the pending SEC investigation and pending
    litigation arising out of the previous announcement of our
    restatement of historical financial statements for 2005 and
    prior periods, other pending government proceedings and other
    pending litigation;
    Risks related to the senior living industry; and
    Risks related to our organization and structure.  Liquidity
    Risks Relating to Our Compliance with Our Credit Agreements and
    Financial Obligations
  As described in Significant 2008 and 2009 Developments, we
    are presently operating under waivers of our Bank Credit
    Facility and certain other financial agreements including
    project completion and operating deficit agreements and
    guarantees and those waivers expire on March 31,
    2009.
  Form 8-K
 21




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As described in Significant 2008 and 2009 Developments, we
    are currently in discussions with our lenders and venture
    partners to implement a restructuring of our financial
    obligations. However, there can be no assurances that these
    efforts will prove successful and we could be forced to seek
    reorganization under the U.S. Bankruptcy Code.
    Risks
    Relating to Our Business Operations
  Recent disruptions in the financial markets could affect
    our ability to obtain financing for development of our
    properties and other purposes, including any refinancing of our
    Bank Credit Facility or other debt due in 2009 or 2010, on
    reasonable terms and could have other adverse effects on us and
    the market price of our common stock.
    Due to the dependency of our revenues on private pay
    sources, events which adversely affect the ability of seniors to
    afford our monthly resident fees or entrance fees (including
    downturns in housing markets or the economy) could cause our
    occupancy rates, revenues and results of operations to
    decline.
   22




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and/or
  and/or
  
    Our results of operations could be adversely affected
    if we are required to perform under various financial guarantees
    or support arrangements that we have entered into as part of our
    operating strategy;
    Our failure to comply with financial obligations
    contained in debt instruments could result in the acceleration
    of the debt extended pursuant to such debt instruments, trigger
    other rights and restrict our operating and acquisition
    activity, and in the case of ventures, may cause acceleration of
    the ventures debt repayment obligations and any of our
    correlated guarantee obligations; and
    Early termination or non-renewal of our management
    agreements could cause a loss in revenues.    Our international operations are subject to a variety of
    risks that could adversely affect those operations and thus our
    profitability and operating results.
    Our failure to lease up or sell all or some of our Germany
    facilities may negatively impact our results of operations and
    cash flows.
  start-up
 23




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Our failure to attract partners for developing senior
    living communities in the future could adversely affect our
    revenues and results of operations, and harm our ability to
    finance the construction of new communities.
    Early termination or non-renewal of our management
    agreements could cause a loss in revenues.
        Ownership of the communities we manage is heavily
    concentrated with three of our business partners.
     24




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Our operations and the operations of entities that we have
    acquired or may acquire, directly or through an ownership
    interest in a venture, may not be integrated successfully or the
    intended benefits of such transactions may not be realized or
    may be subject to unforeseen liabilities, any of which could
    have a negative impact on our revenues, expenses and operating
    results.
    
    business operations may continue to deteriorate due to various
    factors, including changes in macro-economic conditions;
    diversion of management attention to the integration of the
    operations of the acquisitions could have a material adverse
    effect on the continued operation and expansion of our existing
    business;
    we may not effectively integrate the operations of these
    acquisitions;
    we may experience difficulties and incur greater than
    anticipated expenses related to the assimilation and retention
    of the employees from these acquisitions; and
    following any one of these acquisitions, we may not achieve any
    expected cost savings and operating efficiencies in connection
    with such acquisition, such as the elimination of redundant
    administrative costs and community management costs.  and/or
  Our current and future investments in ventures could be
    adversely affected by our lack of sole
    decision-making
    authority, our reliance on venture partners financial
    condition, any disputes that may arise between us and our
    venture partners and our exposure to potential losses from the
    actions of our venture partners.
    
    we share decision-making authority with our venture partners
    regarding major decisions affecting the ownership or operation
    of the venture and the community, such as the sale of the
    community or the making of additional capital contributions for
    the benefit of the community and the approval of the annual
    operating and capital budgets, which may prevent us from taking
    actions that are opposed by our venture partners;
    prior consent of our venture partners may be required for a sale
    or transfer to a third party of our interests in the venture,
    which restricts our ability to dispose of our interest in the
    venture;
    our venture partners might become bankrupt or fail to fund their
    share of required capital contributions, which may delay
    construction or development of a community or increase our
    financial commitment to the venture; 25




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
    our venture partners may have business interests or goals with
    respect to the community that conflict with our business
    interests and goals, which could increase the likelihood of
    disputes regarding the ownership, management or disposition of
    the community;
    disputes may develop with our venture partners over decisions
    affecting the community or the venture, which may result in
    litigation or arbitration that would increase our expenses and
    distract our officers
    and/or
    directors from focusing their time and effort on our business,
    and possibly disrupt the
    day-to-day
    operations of the community such as delaying the implementation
    of important decisions until the conflict or dispute is
    resolved; and
    we may suffer losses as a result of the actions of our venture
    partners with respect to our venture investments.  The refinancing or sale of communities held in ventures
    may not result in future distributions to us.
    Liability claims against us in excess of insurance limits
    could adversely affect our financial condition and results of
    operations.
         26




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Our results of operations could be adversely affected if
    we are required to perform under various financial guarantees or
    support arrangements that we have entered into as part of our
    operating strategy.
    Our failure to generate sufficient cash flow to cover
    required interest, principal and operating lease payments could
    result in defaults of the related debt or operating
    leases.
  Our results of operations could
    be adversely affected if we are required to perform under
    various financial guarantees or support arrangements that we
    have entered into as part of our operating strategy Liquidity risks relating to our
    compliance with our credit agreements and financial
    obligations.
  Our failure to comply with financial obligations contained
    in debt instruments could result in the acceleration of the debt
    extended pursuant to such debt instruments, trigger other rights
    and restrict our operating and acquisition activity, and in the
    case of ventures, may cause acceleration of the ventures
    debt repayment obligations and any of our correlated guarantee
    obligations.
    
    require us to satisfy financial statement delivery requirements;
    require us to meet certain financial tests; 27




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
    restrict our ability to pay dividends or repurchase our common
    stock;
    require consent for a change in control; and
    restrict our ability and our subsidiaries ability to
    borrow additional funds, dispose of all or substantially all
    assets, or engage in mergers or other business combinations in
    which we are not the surviving entity without lender consent.      Liquidity
    risks relating to our compliance with our credit agreements and
    financial obligations.
  Interest rate increases could adversely affect our
    earnings because a portion of our total debt is floating rate
    debt.
   28




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We may be adversely affected by fluctuations in currency
    exchange rates.
    Our accounting policies and methods are fundamental to how
    we report our financial condition and results of operations and
    they may require management to make estimates about matters that
    are inherently uncertain.
  Form 10-K.
  Termination of resident agreements and vacancies in
    communities could adversely affect our revenues and
    earnings.
    The discovery of environmental problems at any of the
    communities we own or operate could result in substantial costs
    to us, which would have an adverse effect on our earnings and
    financial condition.
    clean-up
   29




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Unionization may impact wages rates and work rules.
    Comments from SEC staff review may require that we amend
    our periodic reports filed with the SEC, which could lead to
    significant changes in our past and current disclosure.
  Form 10-K Form 10-KA Form 10-KA
  Form 10-K Form 10-K, Form 10-K
  Risks
    Related to the Pending SEC Investigation and Pending Litigation
    Arising Out of the Prior Announcement of Our Restatement of
    Historical Financial Statements for 2005 and Prior Periods,
    Other Pending Government Proceedings and Other Pending
    Litigation
  The SECs formal investigation and pending putative
    securities class action and derivative litigation have resulted
    in significant costs and expenses, diverted resources and could
    have a material adverse effect on our business, financial
    condition and results of operations.
  Form 10-K, Form 10-K,
 30




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Form 10-K
    We are involved in other litigation matters that will
    continue to divert our resources and attention, and could result
    in substantial monetary damages that could have a material
    adverse effect on our financial condition and results of
    operations if we do not prevail.
  Form 10-K, qui tam
  The Trinity OIG investigation and IRS audit may result in
    substantial fines and penalties, which could harm our financial
    condition, results of operations and cash flow.
  Form 10-K,
 31




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Our potential indemnification obligations and limitations
    of our director and officer liability insurance may have a
    material adverse effect on our financial condition and results
    of operations.
  Form 10-K,
      Risks
    Related to the Senior Living Industry
  Competition in our industry is high and may increase,
    which could impede our growth and have a material adverse effect
    on our revenues and earnings.
    Our success depends on attracting and retaining skilled
    personnel and increased competition for or a shortage of skilled
    personnel could increase our staffing and labor costs, which we
    may not be able to offset by increasing the rates we charge to
    our residents.
  day-to-day
 32




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The need to comply with government regulation of senior
    living communities may increase our costs of doing business and
    increase our operating costs.
    
    personnel education, training, and records;
    administration and supervision of medication;
    the provision of limited nursing services;
    admission and discharge criteria;
    documentation, reporting and disclosure requirements;
    staffing requirements;
    monitoring of resident wellness;
    physical plant specifications;
    furnishing of resident units;
    food and housekeeping services;
    emergency evacuation plans; and
    resident rights and responsibilities.    and/or
  and/or
   33




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##### Table of Contents



Risks
    Related to our Organization and Structure
  Anti-takeover provisions in our governing documents and
    under Delaware law could make it more difficult to effect a
    change in control.
    
    Board authority to issue preferred stock without stockholder
    approval.Our Board of Directors is authorized to issue
    preferred stock having a preference as to dividends or
    liquidation over the common stock without stockholder approval.
    The issuance of preferred stock could adversely affect the
    voting power of the holders of our common stock and could be
    used to discourage, delay or prevent a change in control of
    Sunrise;
    Filling of Board vacancies; removal. Any vacancy
    occurring in the Board of Directors, including any vacancy
    created by an increase in the number of directors, shall be
    filled for the unexpired term by the vote of a majority of the
    directors then in office, and any director so chosen shall hold
    office for a term expiring at the next annual meeting of
    stockholders. Directors may be removed with or without cause by
    the affirmative vote of the holders of at least a majority of
    the outstanding shares of our capital stock then 34




---



##### Table of Contents



entitled to vote at an election of directors, provided, that no
    special meeting may be called at the request of the stockholders
    for the purpose of removing any director without cause;  
    Other constituency provision. Our Board of Directors
    is required under our certificate of incorporation to consider
    other constituencies, such as employees, residents, their
    families and the communities in which we and our subsidiaries
    operate, in evaluating any proposal to acquire the Company. This
    provision may allow our Board of Directors to reject an
    acquisition proposal even though the proposal was in the best
    interests of our stockholders subject to any overriding
    applicable law;
    Call of special meetings. A special meeting of our
    stockholders may be called only by the chairman of the board,
    the president, by a majority of the directors or by stockholders
    possessing at least 25% of the voting power of the issued and
    outstanding voting stock entitled to vote generally in the
    election of directors, provided, that no special meeting may be
    called at the request of the stockholders for the purpose of
    removing any director without cause. This provision limits the
    ability of stockholders to call special meetings;
    Stockholder action instead of meeting by unanimous written
    consent. Any action required or permitted to be taken
    by the stockholders must be affected at a duly called annual or
    special meeting of such holders and may not be affected by any
    consent in writing by such holders, unless such consent is
    unanimous. This provision limits the ability of stockholders to
    take action by written consent in lieu of a meeting;
    Supermajority vote of stockholders or the directors required
    for bylaw amendments. A two-thirds vote of the
    outstanding shares of common stock is required for stockholders
    to amend the bylaws. Amendments to the bylaws by directors
    require approval by at least a two-thirds vote of the directors.
    These provisions may make more difficult bylaw amendments that
    stockholders may believe are desirable;
    Two-thirds stockholder vote required to approve some
    amendments to the certificate of incorporation. A
    two-thirds vote of the outstanding shares of common stock is
    required for approval of amendments to the foregoing provisions
    that are contained in our certificate of incorporation. All
    amendments to the certificate of incorporation must first be
    proposed by a two-thirds vote of directors. These supermajority
    vote requirements may make more difficult amendments to these
    provisions of the certificate of incorporation that stockholders
    may believe are desirable; and
    Advance notice bylaw. We have an advance notice
    bylaw provision requiring stockholders intending to present
    nominations for directors or other business for consideration at
    a meeting of stockholders to notify us by a certain date
    depending on whether the matters are to be considered at an
    annual or special meeting. Stockholders proposing matters for
    consideration at an annual meeting must provide notice not
    earlier than 120 days and not later than 90 days prior
    to the anniversary of the date on which we first mailed our
    proxy materials for the immediately preceding annual meeting.
    If, however, the date of the annual meeting is more than
    30 days before or more than 60 days after such
    anniversary date, stockholder notice must be delivered not
    earlier than 120 days and not later than 90 days prior
    to the date of such annual meeting, provided, however, that if
    the first public announcement of the date is less than
    100 days prior to the date of such annual meeting, then
    stockholder notice must be delivered not later than the 10th day
    following such public announcement. Stockholders proposing
    matters for consideration at a special meeting must provide
    notice not less than 120 calendar days prior to the date of the
    special meeting, provided, however, that if the first public
    announcement of the date of such special meeting is less than
    130 days prior to the date of such special meeting,
    stockholder notice must be delivered not later than the
    10th day

    following such public announcement.   35




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##### Table of Contents



Our Board of Directors has adopted a stockholder rights
    plan that could discourage a third party from making a proposal
    to acquire us.
    Our management has influence over matters requiring the
    approval of stockholders.
    Item 1B.
    Unresolved
    Staff Comments  Form 10-K Form 10-KA Form 10-KA
  Item 2.
    Properties     36




---



##### Table of Contents



Item 3.
    Legal
    Proceedings  Trinity
    OIG Investigation and Qui TamAction
    qui tam qui tam Qui tam qui tam Qui tam
   37




---



##### Table of Contents



IRS
    Audit
      SEC
    Investigation
    Putative
    Class Action Litigation
  No. 07-CV-00102-RBW) Rule 10b-5
     38




---



##### Table of Contents



In re Sunrise Senior Living Derivative Litigation,
    Inc., No. 1:07CV00143-RBW, Young, et al. v. Klaassen, et al., No. 2770-N
  Putative
    Shareholder Derivative Litigation
  In re Sunrise Senior Living Derivative Litigation,
    Inc,
  Peter V. Young, et al. v. Paul J. Klaassen et
    al. No. 2770-N
 39




---



##### Table of Contents



and/or
  Resolved
    or Settled Litigation
     40




---



##### Table of Contents



Other
    Pending Lawsuits and Claims
    Item 4.
    Submission
    of Matters to a Vote of Security Holders      Directors

For


Withhold Authority to VoteGlyn F. Aeppel


45,532,913



1,003,082David I. Fuente


45,554,276



981,719Stephen D. Harlan


42,779,266



3,756,729      41




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##### Table of Contents



42




---



##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities      Quarterly
    Market Price Range of Common Stock
  Quarter Ended

High


LowMarch 31, 2008

$
27.21


$
20.19June 30, 2008

$
30.65


$
24.64September 30, 2008

$
22.30


$
12.91December 31, 2008

$
13.90


$
0.27   Quarter Ended

High


LowMarch 31, 2007

$
41.50


$
30.10June 30, 2007

$
42.97


$
36.43September 30, 2007

$
41.05


$
33.00December 31, 2007

$
39.70


$
26.78   Holders
    Dividends
    Issuer
    Purchases of Equity Securities
    Shares Purchased


Maximum NumberTotal Number


Average


as Part of Publicly


of Shares that Mayof Shares


Price Paid


Announced Plans


Yet be PurchasedPurchased(1)


per Share


or Programs


Under the PlansOctober 1  October 31, 2008





$








November 1  November 30, 2008














December 1  December 31, 2008


78,949



1.37







Total


78,949


$
1.37







     (1)
    
    Represents the number of shares acquired by us from employees as
    payment of applicable statutory minimum withholding taxes owed
    upon vesting of restricted stock granted under our 2002 and 2003
    Stock Option and Restricted Stock Plans, as amended. 43




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##### Table of Contents



Item 6.
    Selected
    Financial Data    December 31,(Dollars in thousands, except per share amounts)

2008(1)(2)


2007(2)


2006(2)(3)(4)


2005(2)(3)(5)(6)


2004(2)(Unaudited)STATEMENTS OF INCOME DATA:Operating revenues

$
1,701,643


$
1,583,241


$
1,628,605


$
1,508,851


$
1,266,225Operating expenses


2,091,065



1,807,695



1,700,887



1,474,283



1,283,505(Loss) income from operations


(389,422
)


(224,454
)


(72,282
)


34,568



(17,280
)Gain on the sale and development of real estate and equity
    interests


17,374



105,081



51,347



81,723



14,025Sunrises share of earnings, return on investment in
    unconsolidated communities and gain (loss) from investments
    accounted for under profit-sharing method


(15,175
)


108,969



42,845



12,615



(70
)(Loss) income from continuing operations


(379,764
)


(18,227
)


15,677



82,996



(3,542
)(Loss) income from discontinued operations, net of tax


(37,284
)


(52,048
)


(393
)


68



75Extraordinary loss, net of tax


(22,131
)


Net (loss) income


(439,179
)


(70,275
)


15,284



83,064



(3,467
)Net (loss) income per common share:BasicContinuing operations

$
(7.54
)

$
(0.37
)

$
0.32


$
2.00


$
(0.08
)Discontinued operations, net of tax


(0.74
)


(1.04
)


(0.01
)






Extraordinary loss, net of tax


(0.44
)














Net (loss) income

$
(8.72
)

$
(1.41
)

$
0.31


$
2.00


$
(0.08
)DilutedContinuing operations

$
(7.54
)

$
(0.37
)

$
0.31


$
1.74


$
(0.08
)Discontinued operations, net of tax


(0.74
)


(1.04
)


(0.01
)






Extraordinary loss, net of tax


(0.44
)














Net (loss) income

$
(8.72
)

$
(1.41
)

$
0.30


$
1.74


$
(0.08
)BALANCE SHEET DATA:Total current assets

$
304,908


$
529,964


$
361,998


$
326,888


$
282,524Total current liabilities


735,421



646,311



451,982



280,684



203,998Property and equipment, net


681,352



656,211



609,385



494,069



359,070Property and equipment subject to a sales contract, net










193,158



255,231



473,485Property and equipment subject to financing, net






58,871



62,520



64,174



28,988Goodwill


39,025



169,736



218,015



153,328



121,825Total assets


1,381,557



1,798,597



1,848,301



1,587,785



1,506,453Total debt


636,131



253,888



190,605



248,396



191,666Deposits related to properties subject to a sale contract










240,367



324,782



599,071Liabilities related to properties accounted for under the
    financing method






54,317



66,283



64,208



24,247Deferred income tax liabilities


28,129



82,605



78,632



70,638



60,692Total liabilities


1,233,643



1,214,826



1,201,078



1,094,209



1,139,750Total stockholders equity


138,528



573,563



630,708



480,864



365,122OPERATING AND OTHER DATA:Cash dividends per common share

$



$



$



$



$
Communities (at end of period):Consolidated communities


72



62



62



59



57Communities in unconsolidated ventures


203



199



180



153



122Communities managed for third party owners


160



174



180



186



183Total


435



435



422



398



362Resident capacity:Consolidated communities


9,909



8,683



8,646



7,980



7,943Communities in unconsolidated ventures


22,826



22,340



20,433



16,485



10,929Communities managed for third party owners


21,608



22,894



23,091



26,208



24,237Total


54,343



53,917



52,170



50,673



43,109  44




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##### Table of Contents



(1)
    
    In 2008, we wrote-off $121.8 million of goodwill from our
    acquisitions of MSLS and Karrington Health, Inc., we wrote-off
    $95.8 million of abandoned development projects, we
    incurred restructuring and severance costs of
    $18.1 million, we incurred $36.5 million in impairment
    charges related to owned communities and land parcels and we
    consolidated our German communities on September 1, 2008.(2)
    
    In December 2008, our Trinity subsidiary ceased operations.
    Trinitys results of operations from acquisition in
    September 2006, along with two communities sold in 2008 are
    classified and presented as discontinued operations.(3)
    
    In 2006, Five Star bought out 18 management contracts and we
    received $134.7 million related to their buyout. We also
    wrote off $25.4 in unamortized management contract intangible
    assets. In 2005, Five Star bought out 12 management contracts
    and we received $83 million related to their buyout. We
    also wrote off $14.6 million in unamortized management
    contract intangible assets.(4)
    
    In February 2006, we completed the redemption of our remaining
    5.25% convertible subordinated notes due February 1, 2009
    through the issuance of common stock. Prior to the redemption
    date, substantially all of the approximately $120.0 million
    principal amount of the notes outstanding at the time the
    redemption was announced had been converted into approximately
    6.7 million shares of common stock. The conversion price
    was $17.92 per share in accordance with the terms of the
    indenture governing the notes.(5)
    
    In May 2005, we acquired 100% of the equity interests in
    Greystone, a developer and manager of CCRCs. The operating
    results of Greystone are included in our restated consolidated
    statement of income beginning May 10, 2005.(6)
    
    In October 2005, we completed a two-for-one stock split in the
    form of a 100% stock dividend. As a result of the stock split,
    each stockholder received one additional share of common stock
    for each share on that date. All per share amounts have been
    adjusted to reflect the stock split for all periods presented.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Overview
         45




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##### Table of Contents



and/or
  Significant
    Developments
    Results
    of Operations
    
    management fees related to services provided to operating and
    pre-opened communities for unconsolidated ventures and
    third-party owners;
    resident fees for consolidated communities;
    ancillary fees for care provided in certain communities;
    professional fees from development, marketing and other
    services; and
    reimbursed contract service revenue related to unconsolidated
    ventures and third party owners.    
    community expense for our consolidated communities, which
    includes labor, food, marketing and other direct community
    expense;
    lease expense for certain consolidated communities;
    depreciation and amortization;
    ancillary expense;
    general and administrative expense related to headquarters and
    regional staff expenses and other administrative costs; 46




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##### Table of Contents




    venture expense for asset management and venture accounting;
    development expense for site selection, zoning, community
    design, construction management and financing incurred for
    development communities;
    impairment of goodwill and intangible assets;
    write-off of abandoned projects;
    impairment of communities;
    provision for doubtful accounts;
    loss on financial guarantees and other contracts;
    write-off of unamortized contract costs; and
    reimbursable contract service expense related to unconsolidated
    ventures and third-party owners. 47




---



##### Table of Contents



Percent ChangeYear Ended December 31,


2008 vs.


2007 vs.(In thousands)

2008


2007


2006


2007


2006Operating revenue:Management fees

$
139,409


$
127,830


$
117,228



9.1
%


9.0
%Buyout fees


621



1,626



134,730



(61.8
)%


(98.8
)%Resident fees for consolidated communities


435,580



400,238



379,442



8.8
%


5.5
%Ancillary fees


54,633



58,645



56,673



(6.8
)%


3.5
%Professional fees from development, marketing and other


59,969



38,855



28,553



54.3
%


36.1
%Reimbursed contract services


1,011,431



956,047



911,979



5.8
%


4.8
%Total operating revenue


1,701,643



1,583,241



1,628,605



7.5
%


(2.8
)%Operating expenses:Community expense for consolidated communities


335,739



288,180



274,545



16.5
%


5.0
%Community lease expense


60,145



62,588



59,046



(3.9
)%


6.0
%Depreciation and amortization


51,276



52,701



47,687



(2.7
)%


10.5
%Ancillary expense


60,620



68,958



59,029



(12.1
)%


16.8
%General and administrative


163,159



181,325



131,473



(10.0
)%


37.9
%Venture expense


6,807



7,187



5,516



(5.3
)%


30.3
%Development expense


78,305



72,016



63,634



8.7
%


13.2
%Impairment of goodwill and intangible assets


121,828











N/A



N/AWrite-off of abandoned development projects


95,763



28,430



1,329



NM



NMImpairment of owned communities and land parcels


36,510



7,641



15,049



NM



(49.2
)%Accounting Restatement and Special Independent Committee
    inquiry, SEC investigation and pending stockholder litigation


30,224



51,707



2,600



(41.5
)%


N/ARestructuring cost


18,065











N/A



N/AProvision for doubtful accounts


22,628



8,910



13,965



154.0
%


(36.2
)%Loss on financial guarantees and other contracts


5,022



22,005



89,676



(77.2
)%


(75.5
)%Write-off of unamortized contract costs










25,359



N/A



N/AReimbursable contract services


1,004,974



956,047



911,979



5.1
%


4.8
%Total operating expenses


2,091,065



1,807,695



1,700,887



15.7
%


6.3
%Loss from operations


(389,422
)


(224,454
)


(72,282
)


73.5
%


NMOther non-operating income (expense):Interest income


6,600



9,514



9,476



(30.6
)%


0.4
%Interest expense


(21,406
)


(6,650
)


(6,194
)


NM



7.4
%Loss on investments


(7,770
)






(5,610
)


N/A



N/AOther (expense) income


(21,602
)


(6,089
)


6,706



NM



NMTotal other non-operating (expense) income


(44,178
)


(3,225
)


4,378



NM



NMGain on the sale and development of real estateand equity interests


17,374



105,081



51,347



(83.5
)%


104.6
%Sunrises share of (loss) earnings and return on investment
    in unconsolidated communities


(13,846
)


108,947



43,702



(112.7
)%


149.3
%(Loss) income from investments accounted for under the profit
    sharing method


(1,329
)


22



(857
)


NM



(102.6
)%Minority interests


8,154



4,470



6,916



82.4
%


(35.4
)%(Loss) income before provision for income taxes, discontinued
    operations and extraordinary loss


(423,247
)


(9,159
)


33,204



NM



NMBenefit from (provision for) income taxes


43,483



(9,068
)


(17,527
)


NM



(48.3
)%(Loss) income before discontinued operations and extraordinary
    loss


(379,764
)


(18,227
)


15,677



NM



NMDiscontinued operations, net of tax


(37,284
)


(52,048
)


(393
)


(28.4
)%


NM(Loss) income before extraordinary loss


(417,048
)


(70,275
)


15,284Extraordinary loss, net of tax


(22,131
)










N/A



N/ANet (loss) income

$
(439,179
)

$
(70,275
)

$
15,284



NM



NM  48




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##### Table of Contents



Percent ChangeAs of December 31,


2008 vs.


2007 vs.2008


2007


2006


2007


2006Total communitiesConsolidated


62



62



62



0.0
%


0.0
%Variable Interest Entities


10



1







N/A



N/AUnconsolidated


203



198



180



2.5
%


10.0
%Managed


160



178



180



(10.1
)%


(1.1
)%Total


435



439



422



(0.9
)%


4.0
%Resident capacity


54,343



53,917



52,170



0.8
%


3.3
%     (In millions)

2008


2007


2006Impairment of goodwill

$
(122
)

$



$
Write-off of abandoned development projects


(96
)


(28
)


(1
)Loss from discontinued operations


(37
)


(52
)


Impairment of owned communities


(37
)


(8
)


(15
)Expenses relating to Accounting Restatement, Special Independent
    Committee inquiry, SEC investigation and pending stockholder
    litigation


(30
)


(52
)


(3
)Extraordinary loss due to consolidation of German venture


(22
)






Restructuring costs


(18
)






Write-down of equity investments


(16
)


(25
)


Loss on guarantees related to our condominium project


(3
)


(6
)


(17
)Loss on guarantees related to The Fountains venture


(2
)






(22
)Write-off of intangible assets associated with buyout of
    management contracts










(25
)Loss on guarantees related to our Germany venture






(16
)


(50
)Venture recapitalizations and refinancing


21



57



48Real estate gains deferred from prior years recognized in the
    current period


8



85



35Buyout of management contracts


1



2



135$
(353
)

$
(43
)

$
85   Operating
    Revenue
  Management
    fees
      
    $6.8 million increase from fees associated with existing
    communities of which $4.8 million is attributable to an
    increase in average daily rates in North America,
    $2.2 million is attributable to international communities
    and a decrease of $0.2 million due to lower occupancy; 49




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##### Table of Contents




    $2.6 million increase in management fees from 17
    communities accounted for under the deposit method through July
    2007 with no management fee recognition;
    $4.0 million of expense in 2007 related to a one time
    refund pursuant to an agreement with a venture partner;
    $1.4 million increase of fees from communities in the
    lease-up
    phase;
    $1.2 million increase of fees related to Greystone;
    $2.4 million decrease from terminated management
    contracts; and
    $1.9 million decrease in incentive management fees.      
    $7.2 million from fees associated with existing North
    American communities primarily due to increases in rates;
    $3.1 million of incremental revenues from existing
    international communities;
    $3.8 million of incremental revenues from 31 new
    communities managed in 2007 for unconsolidated ventures and
    third parties;      Buyout
    fees
    Resident
    fees for consolidated communities
      
    $29.8 million from existing consolidated communities
    primarily resulting from increases in average daily rates;
    $11.3 million from the consolidation of nine German
    communities on September 1, 2008;
    $1.8 million from the addition of three consolidated
    Canadian communities that were opened during 2008; offset by a
    $5.2 million decrease from two communities previously
    accounted for under the financing method of accounting in 2007.      
    $17.3 million from existing communities due to an increase
    in the average daily rate and fees for other services; and
    $3.4 million from the acquisition of one community. 50




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##### Table of Contents



Ancillary
    fees
  (In millions)

2008


2007


2006New York Health Care Services

$
35.3


$
30.6


$
25.7Fountains Health Care Services


5.5



5.9



7.0International Health Care Services


13.8



13.6



4.8At Home






8.5



19.2$
54.6


$
58.6


$
56.7       Professional
    fees from development, marketing and other
    (In millions)

2008


2007


2006North America

$
26.1


$
8.2


$
4.5International


18.4



18.9



12.5Greystone


15.5



11.8



11.6$
60.0


$
38.9


$
28.6           
    $5.2 million in fees for international paid to us by our
    ventures or venture partners as compensation for either
    brokering the sale of venture assets or the sale of the majority
    partners equity interest in a venture; and
    $3.2 million in North American development fees as five
    communities earned fees throughout all of 2007 compared to only
    a portion of the year in 2006.  Reimbursed
    contract services
   51




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##### Table of Contents



Operating
    Expenses
  Community
    expense for consolidated communities
      
    $26.9 million from existing communities resulting primarily
    from increased labor, utility, and repairs and maintenance costs;
    $16.7 million from the consolidation of our nine German
    communities on September 1, 2008; and
    $4.0 million from the addition of three Canadian
    communities that were opened during 2008.      
    $11.6 million increase from existing communities resulting
    primarily from increased labor costs; and
    $2.0 million increase from the acquisition of one community.  Community
    lease expense
          Depreciation
    and amortization
    (In thousands)

2008


2007


2006North America

$
44,848


$
47,747


$
43,985Greystone


3,249



4,068



3,462UK and Canada


1,182



750



160Germany


1,997



136



80$
51,276


$
52,701


$
47,687        52




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##### Table of Contents



Ancillary
    expenses
  (In millions)

2008


2007


2006New York Health Care Services

$
33.3


$
32.7


$
23.5Fountains Health Care Services


5.1



5.7



6.0International Health Care Services


22.2



21.7



8.9At Home






8.8



20.6$
60.6


$
68.9


$
59.0       General
    and administrative
          
    $29.2 million increase in bonus expense primarily relating
    to gains at one of our U.K. ventures. During 2007, our first UK
    venture in which we have a 20% equity interest sold seven
    communities to a venture in which we have a 10% interest.
    Primarily as a result of the gains on these asset sales recorded
    in the ventures, we recorded equity in earnings in 2007 of
    approximately $75.5 million. When our UK and Germany
    ventures were formed, we established a bonus pool in respect to
    each venture for the benefit of employees and others responsible
    for the success of these ventures. At that time, we
    contractually agreed with our partner that after certain return
    thresholds were met, we would each reduce our percentage
    interests in venture distributions with such excess to be used
    to fund these bonus pools. During 2007, we recorded bonus
    expense of $27.8 million in respect of the bonus pool
    relating to the UK venture. These bonus amounts are funded from
    capital events and the cash is retained by us in restricted cash
    accounts. As of December 31, 2007, approximately
    $18.0 million of this amount was included in restricted
    cash. Under this bonus arrangement, no bonuses are payable until
    we receive distributions at least equal to our capital
    contributions and certain loans made by us to the UK and Germany
    ventures.
    $2.9 million increase in legal expense related to the our
    exploration of strategic alternatives and the settlement of
    litigation;
    $2.6 million increase related to costs associated with
    potential acquisitions that we decided not to pursue; 53




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##### Table of Contents




    $9.0 million increase related to the implementation of
    outsourcing of our payroll processing function to ADP; and
    $5.7 million increase in salaries, employee benefits and
    travel costs as the result of additional employees to support 17
    additional communities in 2007.  Venture
    expense
          Development
    expense
      
    $4.7 million increase from the write-off of prepaid
    insurance for development projects due to the write-off of three
    condominium projects and other development projects; and
    $2.1 million increase in project costs not able to be
    capitalized as the projects were not considered probable.      
    $2.3 million increase in salaries and benefits resulting
    from increased staff to support development;
    $2.6 million increase in travel related to the higher level
    of development activity;
    $2.9 million increase in research, legal and other
    development expenses related to higher level of development
    activity.  Impairment
    of goodwill and intangible assets
    Write-off
    of abandoned development projects
   54




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##### Table of Contents



Impairment
    of owned communities and land parcels
    Accounting Restatement, Special Independent Committee
    Inquiry, SEC investigation and pending stockholder litigation
    Restructuring
    cost
    Provision
    for doubtful accounts
          Loss on
    financial guarantees and other contracts
        Write-off
    of unamortized contract costs
   55




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##### Table of Contents



Reimbursable
    contract services
    Other
    Non-operating Income (Expense)
      
    $15.9 million of foreign exchange losses in 2008 compared
    to $2.3 million of foreign exchange losses in 2007. In
    2008, the exchange loss was comprised of $14.2 million in
    losses related to the Canadian dollar and $1.7 million in
    losses related to the Euro and British pound;
    $7.8 million unrealized loss on our investments in auction
    rate securities which are classified as trading securities and
    carried at fair value. The unrealized loss on our investments
    was based on an analysis of sales discounts achieved in the
    secondary market and managements judgment and resulted in
    an estimated discount of 20% from the face amount of the
    securities. Due to the uncertainty in the market for auction
    rate securities, it is reasonably likely that this assumption
    could change in the future. If the discount used was 10%, the
    unrealized loss would have been $3.9 million. If the
    discount used was 30%, the unrealized loss would have been
    $11.7 million; and
    $14.8 million increase in interest expense due to increased
    borrowings and the consolidation of our nine German communities
    at September 1, 2008.     56




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##### Table of Contents



Gain
    on the Sale and Development of Real Estate and Equity
    Interests
    December 31,2008


2007


2006Properties accounted for under basis of performance of services

$
9.6


$
3.6


$
1.8Properties accounted for previously under financing method


0.5



32.8



Properties accounted for previously under deposit method


0.9



52.4



35.3Properties accounted for under the profit-sharing method


6.7







Land and community sales


(0.9
)


5.7



5.4Condominium sales


1.0







Sales of equity interests and other sales


(0.4
)


10.6



8.8Total gains on the sale and development of real estate and
    equity interests

$
17.4


$
105.1


$
51.3     Sunrises
    Share of Earnings and Return on Investment in Unconsolidated
    Communities
  December 31,(In millions)

2008


2007


2006Sunrises share of earnings (losses) in unconsolidated
    communities

$
(31.0
)

$
60.7


$
(12.0
)Return on investment in unconsolidated communities


33.4



72.7



55.7Impairment of equity investments


(16.2
)


(24.5
)


$
(13.8
)

$
108.9


$
43.7     lease-up
    lease-up
   57




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##### Table of Contents



(Loss)
    Income from Investments Accounted for Under the Profit Sharing
    Method
    December 31,2008


2007


2006Revenue

$
16,635


$
23,791


$
19,902Expenses


(12,056
)


(17,450
)


(16,528
)Income from operations before depreciation


4,579



6,341



3,374Depreciation expense










Distributions to other investors


(5,908
)


(6,319
)


(4,231
)(Loss) income from investments accounted for under the
    profit-sharing method

$
(1,329
)

$
22


$
(857
)  58




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##### Table of Contents



Minority
    Interests
    Benefit
    from (Provision for) Income Taxes
    Discontinued
    Operations
    Extraordinary
    Loss
  Consolidation of
    Variable Interest Entities
  Liquidity
    and Capital Resources
  Overview
     59




---



##### Table of Contents



lease-up
              Germany
    Venture
  start-up
 60




---



##### Table of Contents



Consolidation of
    Variable Interest Entities
        2009


1,718


$
2,4212010


1,183



1,6672011


1,013



1,428
3,914


$
5,516     2009


10,471


$
14,7582010


5,482



7,7272011


1,781



2,5102012







17,734


$
24,995  61




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##### Table of Contents



Long-Term
    Debt and Bank Credit Facility
    Mortgages,





Variable


GermanyBank Credit


Wholly-Owned


Land


Interest


VentureFacility


Properties


Loans


Entity Debt


Debt


Other


Total2009

$
95,000


$
86,346


$
34,327


$
23,905


$
185,901


$
46,970


$
472,4492010






37,217



















37,2172011






2,364



3,080















5,4442012






15,033



















15,0332013






100,539



















100,539Thereafter






5,449



















5,449$
95,000


$
246,948


$
37,407


$
23,905


$
185,901


$
46,970


$
636,131     Bank
    Credit Facility
    
    temporarily (in February 2008) and then permanently (in
    July 2008) reduced the maximum principal amount available
    under the Bank Credit Facility to $160.0 million; and 62




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##### Table of Contents




    waived compliance with the financial covenants through
    March 30, 2009.        
    we are generally prohibited from declaring or making any payment
    in the form of a stock repurchase or payment of a cash dividend
    or from incurring any obligation to do so;
    effective on the date of the Ninth Amendment, the borrowing rate
    in US dollars, was LIBOR plus 3.75% or the Base Rate (the higher
    of the Federal Funds Rate plus 0.50% and Prime) plus 2.25%
    (through the end of the then-current interest period).
    Notwithstanding anything to the contrary in the Bank Credit
    Facility, the minimum rate upon which interest could accrue upon
    any of the loans at any time could not be less than 5% per annum;
    effective on the date of the Tenth Amendment, the borrowing rate
    in US dollars, will be LIBOR plus 4.75% Eurodollar Rate Loans
    and Base Rate (as defined in the Tenth Amendment) plus 3.25% for
    Base Rate Loans (5.18% at December 31, 2008);
    there can be no additional borrowings and no issuances of any
    new letters of credit until April 1, 2009, and then only if
    we achieve compliance with the financial covenants of the loan
    documents;
    compliance with the financial covenants of the Bank Credit
    Facility from December 30, 2008 through March 30, 2009
    is waived;
    triggering of the cross default section of the Bank Credit
    Facility through March 30, 2009 for certain events of
    default which might occur under other credit facilities is
    waived; and
    we make principal repayments to lenders of $1.5 million and
    a modification fee of $0.4 million.         63




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##### Table of Contents



New
    Mortgage Financing in 2008
  30-year
      Other
    Guarantees
  Guarantors Accounting
    and Disclosure Requirements for Guarantees, Including Indirect
    Guarantees of Indebtedness of Others
  and/or
 64




---



##### Table of Contents



FundingsFIN 45


FAS 5


Total


FromLiability


Liability


Liability


January 1,for Future


for Future


for Future


2008Maximum Potential


Fundings at


Fundings at


Fundings at


ThroughAmount of Future


December 31,


December 31,


December 31,


December 31,Guarantee Type

Fundings


2008


2008


2008


2008Debt repayment

$
1,510


$
169


$



$
169


$
Operating deficit


Uncapped



947







947



20,426Operating deficit for Germany


Uncapped















20,038Income support


Uncapped



740



11,991



12,731



7,000Other










125



125



125Total





$
1,856


$
12,116


$
13,972


$
47,589     Aston
    Gardens
      Fountains
   65




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##### Table of Contents



Senior
    Living Condominium Project
    Other
    Guarantees
      Agreements
    with Marriott International, Inc.
   66




---



##### Table of Contents



Standstill
    Agreement for Sunrise of Hannover, Germany
  inter alia inter alia
  Standstill
    Agreement for Sunrise of Munich, Germany
  inter alia inter alia
  Contractual
    Obligations
   67




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##### Table of Contents



Payments due by periodMoreLess Than








ThanContractual Obligations

Total


1 Year


1-3 Years


4-5 Years


5 YearsLong-term debt

$
541,131


$
377,449


$
42,661


$
115,572


$
5,449Bank Credit Facility


95,000



95,000











Greystone seed capital


3,199



3,199











Equity investments in unconsolidated entities


10,359



7,561



2,798







Operating leases


507,005



63,335



124,591



116,241



202,838Total

$
1,156,694


$
546,544


$
170,050


$
231,813


$
208,287   Greystone
    Seed Capital
      Cash
    Flows
    Accounting for Sales of Real Estate.
   68




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##### Table of Contents



Market
    Risk
    Maturity Date

Fixed Rate


Variable RateThrough December 31,

Debt


Debt2009

$
1,365


$
375,0452010






133,2562011






5,4442012






15,0332013






100,539Thereafter


4,017



1,433Total Carrying Value

$
5,382


$
630,750Average Interest Rate


6.8
%


4.3
%Estimated Fair Market Value

$
5,416


$
613,085  69




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##### Table of Contents



Critical
    Accounting Estimates
      Impairment
    of Goodwill, Intangible Assets, Long-Lived Assets and
    Investments in Ventures
  Nature of Estimates Required 
    Goodwill.
  Nature of Estimates Required  Intangibles and
    Long-Lived Assets.
 70




---



##### Table of Contents



Assumptions and Approach Used. and/or
    
    Business Projections We make assumptions
    regarding the levels of revenue from communities and services.
    We also make assumptions about our cost levels (e.g., capacity
    utilization, labor costs, etc.). Finally, we make assumptions
    about the amount of cash flows that we will receive upon a
    future sale of the communities using estimated cap rates. These
    assumptions are key inputs for developing our cash flow
    projections. These projections are derived using our internal
    business plans and budgets;
    Growth Rate A growth rate is used to
    calculate the terminal value of the business, and is added to
    budgeted earnings before interest, taxes, depreciation and
    amortization. The growth rate is the expected rate at which
    earnings are projected to grow beyond the planning period;
    Economic Projections Assumptions regarding
    general economic conditions are included in and affect our
    assumptions regarding pricing estimates for our communities and
    services. These macro-economic assumptions include, but are not
    limited to, industry projections, inflation, interest rates,
    price of labor, and foreign currency exchange rates; and
    Discount Rates When measuring a possible
    impairment, future cash flows are discounted at a rate that is
    consistent with a weighted average cost of capital for a
    potential market participant. The weighted average cost of
    capital is an estimate of the overall after-tax rate of return
    required by equity and debt holders of a business enterprise.       71




---



##### Table of Contents



Nature of Estimates Required  Investments in
    Ventures.
    Assumptions and Approach Used.
  Loss
    Reserves for Self-Insured Programs
  Nature of Estimates Required.
      Assumptions and Approach Used for Self-Insured
    Risks.
 72




---



##### Table of Contents



Sensitivity Analysis for Self-Insured
    Risks.
    Assumptions and Approach Used for Health and Dental
    Plans.
  Sensitivity Analysis for Self-Insured Health and Dental Plan
    Costs.
  Variable
    Interest Entities
  Nature of Estimates Required.
    Assumptions.
  Valuation
    of Deferred Tax Assets
  Nature of Estimates Required.
  Accounting for Income Taxes ,
 73




---



##### Table of Contents



Assumptions and Approach Used.
    
    Nature, frequency, and severity of current and cumulative
    financial reporting losses A pattern of
    objectively measured recent financial reporting losses is a
    source of negative evidence. In certain circumstances,
    historical information may not be as relevant due to changed
    circumstances;
    Sources of future taxable income  Future
    reversals of existing temporary differences are verifiable
    positive evidence. Projections of future taxable income
    exclusive of reversing temporary differences are a source of
    positive evidence but such projections are more subjective and
    when such projections are combined with a history of recent
    losses it is difficult to reach verifiable conclusions and,
    accordingly, we give little or no weight to such projections
    when combined recent financial reporting losses; and
    Tax planning strategies If necessary and
    available, tax planning strategies would be implemented to
    accelerate taxable amounts to utilize expiring carryforwards.
    These strategies would be a source of additional positive
    evidence and, depending on their nature, could be heavily
    weighted.        Liability
    for Possible Tax Contingencies
   74




---



##### Table of Contents



Evaluation and Nature of Estimates
    Required.
            Interest and Penalties.
  Assumptions.
  Accounting
    for Financial Guarantees
     75




---



##### Table of Contents



Assumptions and Approach Used.
    
    Business Projections We make assumptions
    regarding the levels of revenue from communities and services.
    We also make assumptions about our cost levels (e.g., capacity
    utilization, labor costs, etc.). Finally, we make assumptions
    about the amount of cash flows that we will receive upon a
    future sale of the communities using estimated cap rates. These
    assumptions are key inputs for developing our cash flow
    projections. These projections are derived using our internal
    business plans and budgets;
    Growth Rate A growth rate is used to
    calculate the terminal value of the business, and is added to
    budgeted earnings before interest, taxes, depreciation and
    amortization. The growth rate is the expected rate at which
    earnings is projected to grow beyond the planning period;
    Economic Projections Assumptions regarding
    general economic conditions are included in and affect our
    assumptions regarding pricing estimates for our communities and
    services. These macro-economic assumptions include, but are not
    limited to, industry projections, inflation, interest rates,
    price of labor, and foreign currency exchange rates; and
    Discount Rates When measuring a possible
    loss, future cash flows are discounted at a rate that is
    consistent with a weighted average cost of capital for a
    potential market participant. The weighted average cost of
    capital is an estimate of the overall after-tax rate of return
    required by equity and debt holders of a business enterprise.    Assumptions and Approach Used in Calculating our Loss on
    Completion Guarantees
  Litigation
   76




---



##### Table of Contents



and/or qui tam
  New
    Accounting Standards
  Fair
    Value Measurements ,
          Accounting for
    Uncertainty in Income Taxes Accounting for Income Taxes,
  No. 06-8, Applicability of the Assessment of a Buyers Continuing
    Investment under FASB Statement No. 66, Accounting for
    Sales of Real Estate, for Sales of Condominiums (EITF 06-8) EITF 06-8 states 06-8.
  Future
    Adoption of Accounting Standards
    Business Combinations
 77




---



##### Table of Contents



Non-controlling Interests in Consolidated Financial
    Statements  an Amendment of ARB No. 51
  No. FAS 133-1 FIN 45-4, Disclosures about Credit Derivatives and Certain
    Guarantees: An Amendment of FASB Statement No. 133 and FASB
    Interpretation No. 45; and Clarification of the Effective
    Date of FASB Statement No. 161 FAS 133-1 FIN 45-4). FAS 133-1 FIN 45-4 FAS 133-1 FIN 45-4,
  Impact of
    Inflation
      Item 7A.
    Quantitative
    and Qualitative Disclosure About Market Risk   78




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data    PageSunrise Senior Living, Inc.Report of Independent Registered Public
    Accounting Firm


80Consolidated Balance Sheets


81Consolidated Statements of Income


82Consolidated Statements of Changes in
    Stockholders Equity


83Consolidated Statements of Cash Flows


84Notes to Consolidated Financial Statements


85PS UK Investment (Jersey) LP*PS Germany Investment (Jersey) LP*AL US Development Venture, LLC*Metropolitan Senior Housing, LLC*Sunrise Aston Gardens Venture, LLC*Sunrise First Assisted Living Holdings, LLC*Sunrise Second Assisted Living Holdings, LLC*Sunrise IV Senior Living Holdings, LLC*    *
    
    To be filed by amendment as soon as these financial statements
    become available. 79




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
          Accounting for
    Uncertainty in Income Taxes No. 06-8, Applicability of the Assessment of a Buyers Continuing
    Investments under FASB Statement No. 66, Accounting for
    Sales of Real Estate for Condominiums,
    
    80




---



##### Table of Contents



SUNRISE
    SENIOR LIVING, INC.
 CONSOLIDATED
    BALANCE SHEETS  December 31,(In thousands, except per share and share amounts)

2008


2007ASSETSCurrent Assets:Cash and cash equivalents

$
29,513


$
138,212Accounts receivable, net


54,842



76,909Income taxes receivable


30,351



63,624Due from unconsolidated communities


45,255



61,854Deferred income taxes, net


25,341



33,567Restricted cash


37,392



61,999Assets held for sale


49,076



12,716Prepaid insurance


8,850



23,720Prepaid expenses and other current assets


24,288



57,363Total current assets


304,908



529,964Property and equipment, net


681,352



656,211Property and equipment subject to financing, net






58,871Investment in marketable securities


31,080



Due from unconsolidated communities


31,693



19,555Intangible assets, net


70,642



83,769Goodwill


39,025



169,736Investments in unconsolidated communities


66,852



97,173Investments accounted for under the profit-sharing method


22,005



Restricted cash


123,772



165,386Other assets, net


10,228



17,932Total assets

$
1,381,557


$
1,798,597LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Current maturities of long-term debt

$
377,449


$
122,541Outstanding draws on bank credit facility


95,000



100,000Accounts payable and accrued expenses


184,144



275,362Due to unconsolidated communities


914



37,344Deferred revenue


7,327



9,285Entrance fees


35,270



34,512Self-insurance liabilities


35,317



67,267Total current liabilities


735,421



646,311Long-term debt, less current maturities


163,682



31,347Liabilities related to properties accounted for under the
    financing method






54,317Investment accounted for under the profit-sharing method


8,332



51,377Guarantee liabilities


13,972



65,814Self-insurance liabilities


68,858



74,971Deferred gains on the sale of real estate and deferred revenues


88,706



74,367Deferred income tax liabilities


28,129



82,605Other long-term liabilities, net


126,543



133,717Total liabilities


1,233,643



1,214,826Minority interests


9,386



10,208Stockholders Equity:Preferred stock, $0.01 par value, 10,000,000 shares
    authorized, no shares issued and outstanding






Common stock, $0.01 par value, 120,000,000 shares
    authorized, 50,872,711 and 50,556,925 shares issued and
    outstanding, net of 342,525 and 103,696 treasury shares, at
    December 31, 2008 and 2007, respectively


509



506Additional paid-in capital


458,404



452,640Retained (loss) earnings


(327,056
)


112,123Accumulated other comprehensive income


6,671



8,294Total stockholders equity


138,528



573,563Commitments and contingenciesTotal liabilities and stockholders equity

$
1,381,557


$
1,798,597    81




---



##### Table of Contents



SUNRISE
    SENIOR LIVING, INC.
 CONSOLIDATED
    STATEMENTS OF INCOME  Year Ended December 31,(In thousands, except per share amounts)

2008


2007


2006Operating revenue:Management fees

$
139,409


$
127,830


$
117,228Buyout fees


621



1,626



134,730Resident fees for consolidated communities


435,580



400,238



379,442Ancillary fees


54,633



58,645



56,673Professional fees from development, marketing and other


59,969



38,855



28,553Reimbursed contract services


1,011,431



956,047



911,979Total operating revenues


1,701,643



1,583,241



1,628,605Operating expenses:Community expense for consolidated communities


335,739



288,180



274,545Community lease expense


60,145



62,588



59,046Depreciation and amortization


51,276



52,701



47,687Ancillary expenses


60,620



68,958



59,029General and administrative


163,159



181,325



131,473Venture expense


6,807



7,187



5,516Development expense


78,305



72,016



63,634Impairment of goodwill and intangible assets


121,828







Write-off of abandoned development projects


95,763



28,430



1,329Impairment of owned communities and land parcels


36,510



7,641



15,049Accounting Restatement, Special Independent Committee inquiry,
    SEC investigation and pending stockholder litigation


30,224



51,707



2,600Restructuring cost


18,065







Provision for doubtful accounts


22,628



8,910



13,965Loss on financial guarantees and other contracts


5,022



22,005



89,676Write-off of unamortized contract costs










25,359Reimbursable contract services


1,004,974



956,047



911,979Total operating expenses


2,091,065



1,807,695



1,700,887Loss from operations


(389,422
)


(224,454
)


(72,282
)Other non-operating income (expense):Interest income


6,600



9,514



9,476Interest expense


(21,406
)


(6,650
)


(6,194
)Loss on investments


(7,770
)






(5,610
)Other (expense) income


(21,602
)


(6,089
)


6,706Total other non-operating (expense) income


(44,178
)


(3,225
)


4,378Gain on the sale and development of real estate and equity
    interests


17,374



105,081



51,347Sunrises share of (loss) earnings and return on investment
    in unconsolidated communities


(13,846
)


108,947



43,702(Loss) income from investments accounted for under the
    profit-sharing method


(1,329
)


22



(857
)Minority interests


8,154



4,470



6,916(Loss) income before benefit from (provision for) income taxes,
    discontinued operations and extraordinary loss


(423,247
)


(9,159
)


33,204Benefit from (provision for) income taxes


43,483



(9,068
)


(17,527
)(Loss) income before discontinued operations and extraordinary
    loss


(379,764
)


(18,227
)


15,677Discontinued operations, net of tax


(37,284
)


(52,048
)


(393
)(Loss) income before extraordinary loss


(417,048
)


(70,275
)


15,284Extraordinary loss, net of tax


(22,131
)






Net (loss) income

$
(439,179
)

$
(70,275
)

$
15,284Earnings per share data:Basic net (loss) income per common share(Loss) income before discontinued operations and extraordinary
    loss

$
(7.54
)

$
(0.37
)

$
0.32Discontinued operations, net of tax


(0.74
)


(1.04
)


(0.01
)Extraordinary loss, net of tax


(0.44
)






Net (loss) income

$
(8.72
)

$
(1.41
)

$
0.31Diluted net (loss) income per common share(Loss) income before discontinued operations and extraordinary
    loss

$
(7.54
)

$
(0.37
)

$
0.31Discontinued operations, net of tax


(0.74
)


(1.04
)


(0.01
)Extraordinary loss, net of tax


(0.44
)






Net (loss) income

$
(8.72
)

$
(1.41
)

$
0.30    82




---



##### Table of Contents



SUNRISE
    SENIOR LIVING, INC.
 CONSOLIDATED
    STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY  AccumulatedShares of


Common


Additional








OtherCommon


Stock


Paid-in


Retained


Deferred


Comprehensive(In thousands)

Stock


Amount


Capital


Earnings


Compensation


Income (Loss)


TotalBalance at January 1, 2006


43,453


$
435


$
326,207


$
167,114


$
(12,323
)

$
(569
)

$
480,864Net income














15,284











15,284Foreign currency translation income, net of tax






















2,205



2,205Sunrises share of investees other comprehensive
    income






















893



893Total comprehensive income


























18,382Issuance of common stock to employees


374



3



5,161















5,164Conversion of convertible debt


6,700



67



117,917















117,984Issuance of restricted stock


45



1



532















533Forfeiture of restricted stock










(5
)














(5
)Adoption of SFAS 123R










(12,323
)






12,323







Stock-based compensation expense










5,846















5,846Tax effect from stock-based compensation










1,940















1,940Balance at December 31, 2006


50,572



506



445,275



182,398







2,529



630,708Net loss














(70,275
)










(70,275
)Foreign currency translation income, net of tax






















5,865



5,865Sunrises share of investees other comprehensive
    income






















(100
)


(100
)Total comprehensive loss


























(64,510
)Issuance of restricted stock


88



1



















1Forfeiture or surrender of restricted stock


(103
)


(1
)


(1,818
)














(1,819
)Stock-based compensation expense










7,020















7,020Tax effect from stock-based compensation










2,163















2,163Balance at December 31, 2007


50,557



506



452,640



112,123







8,294



573,563Net loss














(439,179
)










(439,179
)Foreign currency translation income, net of tax






















5,583



5,583Sunrises share of investees other comprehensive
    income






















(7,206
)


(7,206
)Total comprehensive loss


























(440,802
)Issuance of restricted stock


165







(2
)














(2
)Forfeiture or surrender of restricted or common stock


(211
)


(1
)


(1,025
)














(1,026
)Stock option exercises


361



4



4,162















4,166Stock-based compensation expense










4,202















4,202Tax effect from stock-based compensation










(1,573
)














(1,573
)Balance at December 31, 2008


50,872


$
509


$
458,404


$
(327,056
)

$



$
6,671


$
138,528    83




---



##### Table of Contents



SUNRISE
    SENIOR LIVING, INC.
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Year Ended December 31,(In thousands)

2008


2007


2006Operating activitiesNet (loss) income

$
(439,179
)

$
(70,275
)

$
15,284Less: Net loss from discontinued operations


37,284



52,048



393Adjustments to reconcile net (loss) income to net cash (used in)
    provided by operating activities:Extraordinary loss


22,131







Gain on the sale and development of real estate and equity
    interests


(17,374
)


(105,081
)


(51,347
)Loss (income) from investments accounted for under the
    profit-sharing method


1,329



(22
)


857Gain from application of financing method










(1,155
)Unrealized loss on trading securities


7,770







Loss on sale of investments










5,610Impairment of goodwill and intangible assets


121,828







Write-off of abandoned development projects


95,763



28,430



1,329Provision for doubtful accounts


22,628



8,910



13,965Benefit from deferred income taxes


(46,250
)


(8,854
)


(3,781
)Impairment of owned communities and land parcels


36,510



7,641



15,049Loss on financial guarantees and other contracts


5,022



22,005



89,676Sunrises share of loss (earnings) and return on investment
    in unconsolidated communities


13,846



(108,947
)


(11,997
)Distributions of earnings from unconsolidated communities


32,736



168,322



66,381Minority interest in loss of controlled entities


(8,154
)


(4,470
)


(6,916
)Depreciation and amortization


51,276



52,701



47,687Write-off of unamortized contract costs










25,359Amortization of financing costs, debt discount and guarantee
    liabilities


3,735



1,051



1,404Stock-based compensation


3,176



7,020



6,463Changes in operating assets and liabilities:(Increase) decrease in:Accounts receivable


15,812



(15,124
)


(23,242
)Due from unconsolidated senior living communities


(24,278
)


28,111



(83,451
)Prepaid expenses and other current assets


39,660



(60,282
)


(4,041
)Captive insurance restricted cash


2,728



(32,930
)


(48,840
)Other assets


31,120



(35,505
)


6,222Increase (decrease) in:Accounts payable, accrued expenses and other liabilities


(76,484
)


127,983



22,204Entrance fees


758



(3,586
)


913Self-insurance liabilities


(22,935
)


12,866



30,186Guarantee liabilities


(21,625
)


(5,829
)


Deferred gains on the sale of real estate and deferred revenue


6,788



29,621



983Net cash (used in) provided by discontinued operations


(19,555
)


32,682



2,316Net cash (used in) provided by operating activities


(123,934
)


128,486



117,511Investing activitiesCapital expenditures


(177,248
)


(244,803
)


(188,594
)Acquisitions of business assets






(49,917
)


(34,315
)Net funding for condominium project


(57,935
)






Dispositions of property


62,853



60,387



83,290Change in restricted cash


51,778



(21,792
)


(11,428
)Purchases of short-term investments


(102,800
)


(448,900
)


(172,575
)Proceeds from short-term investments


63,950



448,900



172,575Increase in investments and notes receivable


(205,344
)


(183,314
)


(343,286
)Proceeds from investments and notes receivable


223,424



220,312



376,061Payments related to Germany venture


(8,531
)






Investments in unconsolidated communities


(22,929
)


(29,297
)


(77,371
)Distributions of capital from unconsolidated communities






601



5,954Net cash provided by (used in) discontinued operations


329



(720
)


(69,237
)Net cash used in investing activities


(172,453
)


(248,543
)


(258,926
)Financing activitiesNet proceeds from exercised options


4,162







4Additional borrowings of long-term debt


210,788



143,564



54,140Repayment of long-term debt


(18,451
)


(16,105
)


(40,781
)Net (repayments) borrowings on Bank Credit Facility


(5,000
)


50,000



50,000Contribution from minority interests










15,669Distributions to minority interests


(1,344
)


(1,180
)


(630
)Financing costs paid


(2,467
)






(75
)Net cash provided by financing activities


187,688



176,279



78,327Net (decrease) increase in cash and cash equivalents


(108,699
)


56,222



(63,088
)Cash and cash equivalents at beginning of year


138,212



81,990



145,078Cash and cash equivalents at end of year

$
29,513


$
138,212


$
81,990    84




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes
    to Consolidated Financial Statements
  1.
    Organization
    and Presentation  Organization
      Basis
    of Presentation
  EITF 04-5, Determining Whether a General Partner, or the General
    Partners as a Group, Controls a Limited Partnership or Similar
    Entity When the Limited Partners Have Certain Rights
    (EITF 04-5)
       85




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      2.
    Significant
    Accounting Policies    Cash
    and Cash Equivalents
    Restricted
    Cash
    Allowance
    for Doubtful Accounts
    Due
    from Unconsolidated Communities
   86




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Property
    and Equipment
          Real
    Estate Sales
  Accounting for Sales of Real Estate
     87




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
              Capitalization
    of Interest Related to Development Projects
  Capitalization of Interest Cost,
    ( Capitalization of Interest Cost in
    Financial Statements That Include Investments Accounted for by
    the Equity Method
 88




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Goodwill
    and Intangible Assets
        Investments
    in Unconsolidated Communities
    Consolidation of Variable Interest Entities
  EITF 04-5 ,
    Determining Whether a General Partner, or the General Partners
    as a Group, Controls a Limited Partnership or Similar Entity
    When the Limited Partners Have Certain Rights, EITF 04-5.
  The
    Equity Method of Accounting for Investments in Common Stock, No. 78-9,
 89




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Accounting for Investments in Real Estate Ventures, (SOP 78-9). SOP 78-9, and/or
        Deferred
    Financing Costs
    Loss
    Reserves For Certain Self-Insured Programs
     90




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Employee
    Health and Dental Benefits
    Continuing
    Care Agreements
       91




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Accounting
    for Guarantees
    Asset
    Retirement Obligations
  Accounting for Conditional Asset Retirement
    Obligations  an interpretation of FASB Statement
    No. 143, Asset Retirement Obligations
      Income
    Taxes
    Revenue
    Recognition
     92




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
            EITF 99-19, Reporting Revenue Gross as a Principal versus Net as an
    Agent,
  Stock-Based
    Compensation
  Accounting for
    Stock-Based Compensation
  Foreign
    Currency Translation
  Foreign Currency Translation,
 93




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Advertising
    Costs
    Legal
    Contingencies
    Reclassifications
    New
    Accounting Standards
  Fair
    Value Measurements ,
          Accounting for
    Uncertainty in Income Taxes Accounting for Income Taxes,
 94




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  No. 06-8, Applicability of the Assessment of a Buyers Continuing
    Investment under FASB Statement No. 66, Accounting for
    Sales of Real Estate, for Sales of Condominiums (EITF 06-8) EITF 06-8 states 06-8.
  Future
    Adoption of Accounting Standards
    Business Combinations
  Non-controlling Interests in Consolidated Financial
    Statements  an Amendment of ARB No. 51
  No. FAS 133-1 FIN 45-4, Disclosures about Credit Derivatives and Certain
    Guarantees: An Amendment of FASB Statement No. 133 and FASB
    Interpretation No. 45; and Clarification of the Effective
    Date of FASB Statement No. 161 FAS 133-1 FIN 45-4). FAS 133-1 FIN 45-4 FAS 133-1 FIN 45-4,
  3.
    Fair
    Value Measurements   95




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
                4.
    Assets
    Held for Sale  Accounting for the Impairment or
    Disposal of Long-Lived Assets,
  
    executive management has committed to a plan to sell the asset;
    the asset is available for immediate sale in its present
    condition;
    an active program to locate a buyer and other actions required
    to complete the sale have been initiated;
    the asset is actively being marketed; and
    the sale of the asset is probable and it is unlikely that
    significant changes to the sale plan will be made.   96




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  5.
    Allowance
    for Doubtful Accounts    Accounts


OtherReceivable


Assets


TotalBalance January 1, 2005

$
2,498


$



$
2,498Provision for doubtful accounts(1)


6,632



8,000



14,632Write-offs


(1,626
)






(1,626
)Balance December 31, 2006


7,504



8,000



15,504Provision for doubtful accounts(1)


9,564







9,564Write-offs


(4,708
)






(4,708
)Balance December 31, 2007


12,360



8,000



20,360Provision for doubtful accounts(1)


24,164







24,164Write-offs


(1,491
)






(1,491
)Balance December 31, 2008

$
35,033


$
8,000


$
43,033     (1)
    
    Includes provision associated with discontinued operations.  6.
    Property
    and Equipment    December 31,Asset Lives


2008


2007Land and land improvements


15 years


$
130,806


$
77,709Building and building improvements


40 years



473,732



337,310Furniture and equipment


3-10 years



179,635



148,829784,173



563,848Less: Accumulated depreciation






(191,718
)


(157,744
)592,455



406,104Construction in progress






88,897



250,107Property and equipment, net





$
681,352


$
656,211       7.
    Acquisition
    of Sunrise Connecticut Avenue Assisted Living, LLC   97




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Net working capital

$
0.6Property and equipment


40.3Other assets


0.1Land


8.8Less: Debt of venture assumed


(19.9
)Total purchase price (including transaction costs)

$
29.9     8.
    Sales of
    Real Estate    December 31,2008


2007


2006Properties accounted for under basis of performance of services

$
9.6


$
3.6


$
1.8Properties accounted for previously under financing method


0.5



32.8



Properties accounted for previously under deposit method


0.9



52.4



35.3Properties accounted for under the profit-sharing method


6.7







Land and community sales


(0.9
)


5.7



5.4Condominium sales


1.0







Sales of equity interests and other sales


(0.4
)


10.6



8.8Total gains on the sale and development of real estate and
    equity interests

$
17.4


$
105.1


$
51.3   Basis
    of Performance of Services
   98




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Financing
    Method
        December 31,2008


2007


2006Property and equipment subject to financing, net

$



$



$
62,520Liabilities relating to properties subject to the financing
    method










(66,283
)Depreciation expense






505



1,959Management fees received






230



981       Deposit
    Method
     99




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      December 31,2007


2006Properties subject to sales contract, net

$



$
193,158Deposits related to properties subject to a sales contract






(240,367
)Depreciation expense


4,876



8,257Development fees received, net of costs






20Management fees received


2,331



3,738       Land
    and Community Sales
    Sales
    of Equity Interests
  No. 98-8, Accounting for Transfers of Investments That Are in Substance
    Real Estate (EITF 98-8),
  Gain
    (Loss) from Investments Accounted for Under the Profit-Sharing
    Method, net
         100




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year Ended December 31,2008


2007


2006Revenue

$
16,635


$
23,791


$
19,902Expenses


(12,056
)


(17,450
)


(16,528
)Income from operations before depreciation


4,579



6,341



3,374Depreciation expense










Distributions to other investors


(5,908
)


(6,319
)


(4,231
)(Loss) income from investments accounted for under the
    profit-sharing method

$
(1,329
)

$
22


$
(857
)Investments accounted for under the profit-sharing method, net

$
13,673


$
(51,377
)

$
(29,148
)Amortization expense on investments accounted for under the
    profit-sharing method

$
987


$
1,800


$
1,800   Condominium
    Sales
      9.
    Variable
    Interest Entities   101




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    VIEs
    where Sunrise is the Primary Beneficiary
      Germany
    Venture
  start-up
 102




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Consolidation of
    Variable Interest Entities
    (In thousands)Net working capital

$
2,418Property and equipment


166,131Long-term debt:Mortgages


(191,165
)Full recourse loan


(25,557
)Guarantee liabilities


42,709Management contract intangible


(930
)Venture liability to Sunrise


(12,962
)Lease liability to venture


8,473Minority interest


(300
)Consideration paid for option


(4,560
)Cash paydown of venture debt


(6,388
)Extraordinary loss

$
(22,131
)      103




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        2009


1,718


$
2,4212010


1,183



1,6672011


1,013



1,428
3,914


$
5,516     Residents at


DateResident


December 31,


CommunityCapacity


2008


OpenedKlein Flottbeck


97



73



02/01/05Munich


106



77



07/02/07Oberursel


110



56



11/01/06Wiesbaden


115



72



06/01/07Konigstein


110



35



02/01/08Frankfurt


109



67



06/19/06Bonn


101



50



01/20/06     2009


10,471


$
14,7582010


5,482



7,7272011


1,781



2,5102012







17,734


$
24,995    104




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      VIEs
    Where We Are Not the Primary Beneficiary but Hold a Significant
    Variable Interest in the VIEs
      10.
    Buyout of
    Management Contracts   105




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  11.
    Intangible
    Assets and Goodwill    Estimated


December 31,Useful Life


2008


2007Management contracts less accumulated amortization of $32,433
    and $23,084


1-30 years


$
65,532


$
76,909Leaseholds less accumulated amortization of $3,992 and $3,577


10-29 years



3,892



4,307Other intangibles less accumulated amoritization of $763 and $628


1-40 years



1,218



2,553$
70,642


$
83,769          106




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  12.
    Investments
    in Unconsolidated Communities    SunriseVenture

OwnershipKarrington of Findlay Ltd.


50.00
%MorSun Tenant LP


50.00
%Sunrise/Inova McLean Assisted Living, LLC


40.00
%AU-HCU Holdings, LLC(1)


30.00
%RCU Holdings, LLC(1)


30.00
%SunVest, LLC


30.00
%AL One Investments, LLC


25.36
%Metropolitan Senior Housing, LLC


25.00
%Sunrise at Gardner Park, LP


25.00
%Sunrise Floral Vale Senior Living, LP


25.00
%Cheswick & Cranberry, LLC


25.00
%BG Loan Acquisition LP


25.00
%Sunrise Aston Gardens Venture, LLC


25.00
%Master MorSun, LP


20.00
%Master MetSun, LP


20.00
%Master MetSun Two, LP


20.00
%Master MetSun Three, LP


20.00
%Sunrise First Assisted Living Holdings, LLC


20.00
%Sunrise Second Assisted Living Holdings, LLC


20.00
%Sunrise Beach Cities Assisted Living, LP


20.00
%AL U.S. Development Venture, LLC


20.00
%Sunrise HBLR, LLC


20.00
%Sunrise IV Senior Living Holdings, LLC


20.00
%COPSUN Clayton MO, LLC


20.00
%Sunrise of Aurora, LP


20.00
%Sunrise of Erin Mills, LP


20.00
%Sunrise of North York, LP


20.00
%PS Germany Investment (Jersey) LP(2)


20.00
%PS UK Investment (Jersey) LP


20.00
%PS UK Investment II (Jersey) LP


20.00
%Sunrise First Euro Properties LP


20.00
%Master CNL Sun Dev I, LLC


20.00
%Sunrise Bloomfield Senior Living, LLC


20.00
%Sunrise Hillcrest Senior Living, LLC


20.00
%Sunrise New Seasons Venture, LLC


20.00
%Sunrise Rocklin Senior Living LLC


20.00
%Sunrise Sandy Senior Living LLC


20.00
%Sunrise Scottsdale Senior Living LLC


20.00
%Sunrise Staten Island SL LLC


20.00
%Sunrise US UPREIT, LLC


15.40
%Santa Monica AL, LLC


15.00
%Sunrise Third Senior Living Holdings, LLC


10.00
%Cortland House, LP


10.00
%Dawn Limited Partnership


10.00
%     (1)
    
    Investments are accounted for under the profit-sharing method of
    accounting. See Note 8.(2)
    
    Investments are consolidated in accordance with FIN 46R.
    See Note 9. 107




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
       December 31,2008


2007


2006Assets, principally property and equipment

$
4,847,724


$
5,183,922


$
4,370,376Long-term debt


3,933,188



4,075,993



2,971,318Liabilities excluding long-term debt


552,360



549,628



583,008Equity


362,176



558,301



816,050Revenue


1,119,436



1,021,112



846,479Net income (loss)


(130,762
)


(15,487
)


(56,968
)         December 31,2008


2007


2006Sunrises share of earnings (losses) in unconsolidated
    communities

$
(31,133
)

$
60,700


$
(11,997
)Return on investment in unconsolidated communities


33,483



72,710



55,699Impairment of equity investments


(16,196
)


(24,463
)


$
(13,846
)

$
108,947


$
43,702     Return
    on Investment in Unconsolidated Communities
     108




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Transactions
         109




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
            Aston
    Gardens
   110




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Fountains
    Venture
      13.
    Debt    December 31,2008


2007Bank Credit Facility

$
95,000


$
100,000Mortgage debt on wholly-owned properties


246,948



86,096Land loans


37,407



43,199Debt of variable interest entities


23,905



24,593German venture debt


185,901



Other


46,970



636,131



253,888Current maturities


(472,449
)


(222,541
)$
163,682


$
31,347  111




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Mortgages,





Variable


GermanyBank Credit


Wholly-Owned


Land


Interest


VentureFacility


Properties


Loans


Entity Debt


Debt


Other


Total2009

$
95,000


$
86,346


$
34,327


$
23,905


$
185,901


$
46,970


$
472,4492010






37,217



















37,2172011






2,364



3,080















5,4442012






15,033



















15,0332013






100,539



















100,539Thereafter






5,449



















5,449$
95,000


$
246,948


$
37,407


$
23,905


$
185,901


$
46,970


$
636,131     Bank
    Credit Facility
    
    temporarily (in February 2008) and then permanently (in
    July 2008) reduced the maximum principal amount available
    under the Bank Credit Facility to $160.0 million; and
    waived compliance with the financial covenants through
    March 30, 2009.        
    we are generally prohibited from declaring or making any payment
    in the form of a stock repurchase or payment of a cash dividend
    or from incurring any obligation to do so;
    effective on the date of the Ninth Amendment, the borrowing rate
    in US dollars, was LIBOR plus 3.75% or the Base Rate (the higher
    of the Federal Funds Rate plus 0.50% and Prime) plus 2.25%
    (through the end of 112




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  the then-current interest period). Notwithstanding anything to
    the contrary in the Bank Credit Facility, the minimum rate upon
    which interest could accrue upon any of the loans at any time
    shall not be less than 5% per annum;  
    effective on the date of the Tenth Amendment, the borrowing rate
    in US dollars, will be LIBOR plus 4.75% for Eurodollar Rate
    Loans or the Base Rate (as defined in the Tenth Amendment) plus
    3.25% for Base Rate Loans (5.18% at December 31, 2008);
    there can be no additional borrowings and no issuances of any
    new letters of credit until April 1, 2009, and then only if
    we achieve compliance with the financial covenants of the loan
    documents;
    compliance with the financial covenants of the Bank Credit
    Facility from December 30, 2008 through March 30, 2009
    is waived;
    triggering of the cross default section of the Bank Credit
    Facility through March 30, 2009 for certain events of
    default which might occur under other credit facilities is
    waived; and
    we make principal repayments to lenders of $1.5 million and
    a modification fee of $0.4 million.          New
    Mortgage Financing in 2008
  30-year
   113




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Other
    Germany
    Venture Debt
      Stated Value


Book Value









Contractual Rateat December 31,


at December 31,


Calculated


Debt



at December 31,Property

2008


2008


Discount


Maturity

Interest Rate

2008Bonn, Frankurt, Oberursel and Reinbeck

$
70,482


$
70,482


$



Jun-10

Euribor + 2.75%

5.353%Klein Flottbeck


16,632



16,632






Mar-11

Euribor + 3.25%

5.853%Munich


34,280



32,032



2,248


Nov-11/Dec-11

Euribor + 1.25% to

3.85% to 4.60%Euribor + 2.00%Hannover


25,974



13,608



12,366


Oct-11/Dec-11

Euribor + 1.25% to

3.85% to 4.60%Euribor + 2.00%Wiesbaden


32,762



25,983



6,779


Mar-11/Mar-12

Euribor + 2.1%

4.703%Konigstein


30,058



25,682



4,376


Jul-12

Euribor + 1.75%

4.353%Euribor + 2.0%

4.603%Hoesel land


1,482



1,482






Dec-08

Euribor + 2.25%

4.853%Total non-recourse debt

$
211,670


$
185,901


$
25,769    114




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Value
    of Collateral and Interest Paid
      14.
    Income
    Taxes    December 31,2008


2007Deferred tax assets:Sunrise operating loss carryforwards  federal

$
54,006


$
1,910Sunrise operating loss carryforwards  state


25,827



7,903Sunrise operating loss carryforwards  foreign


19,657



5,650Financial guarantees


30,226



25,893Accrued health insurance


8,203



14,872Self-insurance liabilities


8,123



6,989Stock-based compensation


6,672



7,636Deferred development fees


35,085



29,258Allowance for doubtful accounts


9,007



6,178Tax credits


7,562



6,729Accrued expenses and reserves


28,442



20,593Entrance fees


15,939



14,228Other


3,034



1,898Gross deferred tax assets


251,783



149,737U.S. federal and state valuation allowance


(110,297
)


(6,165
)German valuation allowance


(19,322
)


(6,243
)Canadian valuation allowance


(8,332
)


U.K. valuation allowance


(889
)


Net deferred tax assets


112,943



137,329Deferred tax liabilities:Investments in ventures


(105,573
)


(96,333
)Basis difference in property and equipment and intangibles


(1,264
)


(74,826
)Prepaid expenses


(2,519
)


(8,133
)Other


(6,375
)


(7,075
)Total deferred tax liabilities


(115,731
)


(186,367
)Net deferred tax liabilities

$
(2,788
)

$
(49,038
)    115




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          2008


2007


2006Current:Federal

$
(252
)

$
12,921


$
16,054State


3,019



2,903



5,228Foreign






2,098



26Total current expense


2,767



17,922



21,308Deferred:Federal


(46,701
)


(11,362
)


(4,114
)State


1,613



1,282



561Foreign


(1,162
)


1,226



(228
)Total deferred benefit


(46,250
)


(8,854
)


(3,781
)(Benefit from) provision for income taxes before discontinued
    operations and extraordinary loss

$
(43,483
)

$
9,068


$
17,527    116




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Years Ended December 31,(In thousands)

2008


2007


2006(Loss) income before tax benefit (expense) taxed in the U.S

$
(366,629
)

$
(8,441
)

$
39,243(Loss) income before tax benefit (expense) taxed in foreign
    jurisdictions


(56,618
)


(718
)


(6,039
)(Loss) income from continuing operations before tax benefit
    (expense)

$
(423,247
)

$
(9,159
)

$
33,204Tax at US federal statutory rate


(35.0
)%


35.0
%


35.0
%State taxes, net


(5.1
)%


4.3
%


4.2
%Work opportunity credits


(0.3
)%


4.9
%


(1.3
)%Change in valuation allowance


29.9
%


(71.5
)%


11.0
%Tax exempt interest


(0.3
)%


19.2
%


(4.5
)%Tax contingencies


0.5
%


(20.1
)%


4.4
%Write-off of non-deductible goodwill


3.7
%


0.0
%


0.0
%Foreign rate differential


0.8
%


6.6
%


0.0
%APB 23


(0.4
)%


(37.7
)%


0.0
%Transfer pricing


0.5
%


(29.5
)%


0.0
%Other


(4.6
)%


(10.1
)%


4.0
%(10.3
)%


(98.9
)%


52.8
%     (In thousands)

2008


2007Gross unrecognized tax benefit at beginning of year

$
31,343


$
30,158Change attributable to tax positions taken during a prior period


(14,196
)


Change attributable to tax positions taken during a current
    period


670



1,545Decrease attributable to settlements with taxing authorities






Decrease attributable to lapse in statute of limitations






(360
)Gross unrecognized tax benefit at end of year

$
17,817


$
31,343      117




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    15.
    Stockholders
    Equity  Stock
    Options
       2008

2007

2006Risk free interest rate

0.4% - 3.8%

3.6%

4.8% - 5.2%Expected dividend yield





Expected term (years)

0.1 - 8.1

1.0

5.1 - 9.1Expected volatility

27.8% - 79.3%

25.5%

56.1% - 60.7%  118




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Weighted


RemainingAverage


ContractualShares


Exercise Price


TermOutstanding  beginning of year


3,554


$
14.64Granted


4,914



2.29Exercised


(361
)


11.53Forfeited


(4
)


26.16Expired


(296
)


22.04Outstanding  end of year


7,807



6.72



7.2Vested and expected to vest  end of year


6,056



6.72



7.2Exercisable  end of year


2,942



14.39



2.8               Restricted
    Stock
   119




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Weighted AverageGrant DateShares


Fair ValueNonvested, January 1, 2006


842


$
19.79Granted


45



35.75Vested


(37
)


24.48Canceled


(16
)


25.22Nonvested, December 31, 2006


834



20.34Granted


88



33.87Vested


(288
)


14.01Canceled


(108
)


27.38Nonvested, December 31, 2007


526



24.64Granted


164



18.25Vested


(315
)


20.55Canceled


(51
)


27.64Nonvested, December 31, 2008


324



24.91       Restricted
    Stock Units
   120




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Stockholder
    Rights Agreement
         121




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  16.
    Net
    (Loss) Income Per Common Share    Years Ended December 31,2008


2007


2006Numerator for basic net (loss) income per share:(Loss) income from continuing operations

$
(379,764
)

$
(18,227
)

$
15,677(Loss) income from discontinued operations


(37,284
)


(52,048
)


(393
)Extraordinary loss


(22,131
)






Net (loss) income

$
(439,179
)

$
(70,275
)

$
15,284Numerator for diluted net (loss) income per share:(Loss) income from continuing operations

$
(379,764
)

$
(18,227
)

$
15,677(Loss) income from discontinued operations


(37,284
)


(52,048
)


(393
)Extraordinary loss


(22,131
)






Diluted net (loss) income

$
(439,179
)

$
(70,275
)

$
15,284Denominator:Denominator for basic net (loss) income per common
    share  weighted average shares


50,345



49,851



48,947Effect of dilutive securities:Employee stock options and restricted stock










1,775Convertible notes










Denominator for diluted net (loss) income per common
    share  weighted average shares plus assumed
    conversions


50,345



49,851



50,722Basic net (loss) income per common share(Loss) income from continuing operations

$
(7.54
)

$
(0.37
)

$
0.32Loss from discontinued operations


(0.74
)


(1.04
)


(0.01
)Extraordinary loss


(0.44
)






Total net (loss) income

$
(8.72
)

$
(1.41
)

$
0.31Diluted net (loss) income per common share(Loss) income from continuing operations

$
(7.54
)

$
(0.37
)

$
0.31Loss from discontinued operations


(0.74
)


(1.04
)


(0.01
)Extraordinary loss


(0.44
)






Total net (loss) income

$
(8.72
)

$
(1.41
)

$
0.30    122




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  17.
    Commitments
    and Contingencies  Leases
    for Office Space
      Trinity
    Leases
      Leases
    for Operating Communities
  and/or
   123




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      2009

$
61,5222010


62,1012011


59,5522012


59,3042013


55,894Thereafter


202,838$
501,211   Letters
    of Credit
    Guarantees
  Guarantors Accounting and Disclosure Requirements for
    Guarantees, Including Indirect Guarantees of Indebtedness of
    Others
  and/or
 124




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    FundingsFIN 45


FAS 5


Total


FromLiability


Liability


Liability


January 1,for Future


for Future


for Future


2008Maximum Potential


Fundings at


Fundings at


Fundings at


ThroughAmount of Future


December 31,


December 31,


December 31,


December 31,Guarantee Type

Fundings


2008


2008


2008


2008Debt repayment

$
1,510


$
169


$



$
169


$
Operating deficit


Uncapped



947







947



20,426Operating deficit for Germany


Uncapped















20,038Income support


Uncapped



740



11,991



12,731



7,000Other










125



125



125Total





$
1,856


$
12,116


$
13,972


$
47,589     Aston
    Gardens
      Fountains
   125




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Other
      Senior
    Living Condominium Project
    Agreements
    with Marriott International, Inc.
   126




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Employment
    Agreements
      gross-up
    Legal
    Proceedings
  Trinity
    OIG Investigation and Qui TamAction
    qui tam qui tam Qui tam qui tam Qui tam
 127




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        IRS
    Audit
      SEC
    Investigation
   128




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Putative
    Class Action Litigation
  No. 07-CV-00102-RBW) Rule 10b-5
       129




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  In re Sunrise Senior Living Derivative Litigation,
    Inc., No. 1:07CV00143-RBW, Young, et al. v. Klaassen, et al., No. 2770-N
  Putative
    Shareholder Derivative Litigation
  In re Sunrise Senior Living Derivative Litigation,
    Inc,
  Peter V. Young, et al. v. Paul J. Klaassen et
    al. No. 2770-N
 130




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  and/or
  Resolved
    or Settled Litigation
     131




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Other
    Pending Lawsuits and Claims
    18.
    Related-Party
    Transactions  Sunrise
    Senior Living Real Estate Investment Trust
    30-year
  lease-up
   132




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Twelve MonthsEndedDecember 31,2007Management fees

$
5,518Reimbursed contract services


77,277Gain on sale and development of real estate


8,854Interest income received from Sunrise REIT convertible debentures


Interest incurred on borrowings from Sunrise REIT


414Sunrises share of earnings and return on investment in
    unconsolidated communities


180   Sunrise
    Senior Living Foundation
  and/or son-in-law
  12-month
 133




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Fairfax
    Community Ground Lease
  99-year
  Corporate
    Use of Residence
  99-year 99-year
  Purchase
    of Condominium Unit
    Service
    Evaluators Incorporated
  brother-in-law sister-in-law
  on-site on-site
 134




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  on-site
  Greystone
    Earnout Payments
    Purchase
    of Aircraft Interest by Mr. Klaassen
    19.
    Employee
    Benefit Plans  401k
    Plan
    Sunrise
    Executive Deferred Compensation Plans
     135




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Chief
    Executive Officer Deferred Compensation Plan
  12-year
  20.
    Fair
    Value of Financial Instruments        long-term
    21.
    Discontinued
    Operations        136




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  For the Years Ended December 31,(In thousands)

2008


2007


2006Revenue

$
39,761


$
69,309


$
22,476Expenses


(68,085
)


(82,955
)


(22,503
)Impairments


(10,054
)


(56,729
)


(681
)Gain (loss) on sale of real estate


1,094







Income taxes






18,327



315Loss from discontinued operations

$
(37,284
)

$
(52,048
)

$
(393
)     22.
    Information
    about Sunrises Segments        For the Year Ended and as of December 31, 2008NorthAmerica


Greystone


International


Germany


TotalRevenues

$
1,595,929


$
23,966


$
48,677


$
33,071


$
1,701,643Interest income


4,470



72



1,544



514



6,600Interest expense


10,593







1,229



9,584



21,406Foreign exchange (loss) gain










(17,267
)


1,356



(15,911
)Sunrises share of earnings and return on investment in
    unconsolidated communities


(7,318
)






(6,528
)






(13,846
)Depreciation and amortization


44,848



3,249



1,182



1,997



51,276Loss from continuing operations


(291,089
)


(19,318
)


(35,654
)


(33,703
)


(379,764
)Investments in unconsolidated communities


51,372







15,480







66,852Goodwill






39,025











39,025Segment assets


1,080,145



48,644



97,594



155,174



1,381,557Expenditures for long-lived assets


127,788



1,564



47,800



96



177,248Deferred gains on the sale of real estate and deferred revenue


22,815



62,415



3,476







88,706   137




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  For the Year Ended and as of December 31, 2007NorthAmerica


Greystone


International


Germany


TotalRevenues

$
1,509,215


$
16,471


$
39,710


$
17,845


$
1,583,241Interest income


8,143



208



1,014



149



9,514Interest expense


5,527







1,118



5



6,650Foreign exchange (loss) gain










3,966



(6,280
)


(2,314
)Sunrises share of earnings and return on investment in
    unconsolidated communities


31,812



1,600



75,535







108,947Depreciation and amortization


47,747



4,068



750



136



52,701(Loss) income from continuing operations


(21,536
)


(19,693
)


54,847



(31,845
)


(18,227
)Investments in unconsolidated communities


80,423







16,750







97,173Goodwill


130,711



39,025











169,736Segment assets


1,489,786



61,312



213,538



33,961



1,798,597Expenditures for long-lived assets


191,076



4,680



48,908



139



244,803Deferred gains on the sale of real estate and deferred revenue


19,793



54,574











74,367   For the Year Ended and as of December 31, 2006NorthAmerica


Greystone


International


Germany


TotalRevenues

$
1,572,840


$
16,920


$
28,413


$
10,432


$
1,628,605Interest income


8,800



194



419



63



9,476Interest expense


6,655







(493
)


32



6,194Foreign exchange gain (loss)










(1,139
)


445



(694
)Sunrises share of earnings and return on investment in
    unconsolidated communities


54,950







(7,068
)


(4,180
)


43,702Depreciation and amortization


43,985



3,462



160



80



47,687Income (loss) from continuing operations


96,425



(14,490
)


(6,574
)


(59,684
)


15,677Investments in unconsolidated communities


93,327







10,945







104,272Goodwill


181,490



36,525











218,015Segment assets


1,655,004



55,206



104,105



33,986



1,848,301Expenditures for long-lived assets


138,760



714



48,945



175



188,594Deferred gains on the sale of real estate and deferred revenue


23,811



28,147











51,958    138




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
               139




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  23.
    Accounts
    Payable and Accrued Expenses    December 31,2008


2007Accounts payable and accrued expenses

$
66,760


$
71,240Accrued salaries and bonuses


30,123



64,441Accrued employee health and other benefits


47,685



67,096Accrued legal, audit and professional fees


8,933



43,120Other accrued expenses


30,643



29,465$
184,144


$
275,362   24.
    Severance
    and Restructuring Plan        
    annual payments for three years, beginning on the first
    anniversary of the date of termination, equal to
    Mr. Klaassens annual salary ($0.5 million) and
    bonus ($0) for the year of termination;
    continuation of the medical insurance and supplemental coverage
    provided to Mr. Klaassen and his family until
    Mr. Klaassen attains or, in the case of his death, would
    have attained, age of 65 (but to his children only through their
    attainment of age 22); and
    continued participation in his deferred compensation plan in
    accordance with the terms of his employment agreement.   140




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##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Cash Payments


Liability atInitial





and Other


December 31,(In thousands)

Charges


Adjustments


Settlements


2008Voluntary severance

$
8,426


$



$
(5,114
)

$
3,312Involuntary severance


5,198







(3,680
)


1,518CEO retirement compensation


3,736



(2,213
)






1,523Lease termination costs


2,918







(524
)


2,394$
20,278


$
(2,213
)

$
(9,318
)

$
8,747   25.
    Subsequent
    Events  Bank
    Credit Facility
    
    waives compliance with the financial covenants of the Bank
    Credit Facility from December 30, 2008 through
    March 30, 2009;
    waives triggering of the cross default section of the Bank
    Credit Facility through March 30, 2009 for certain events
    of default which might occur under other credit
    facilities; and
    provides for principal repayments to lenders of
    $1.5 million and a modification fee of $0.4 million.    Germany
    Venture
      Trinity
   141




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##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Qui Tam
  Fountains
   142




---



##### Table of Contents



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  26.
    Quarterly
    Results of Operations (Unaudited)    Q1


Q2


Q3


Q4(2)


Total2008Operating revenue

$
419,369


$
421,774


$
424,895


$
435,605


$
1,701,643Loss from continuing operations


(29,557
)


(28,248
)


(49,526
)


(272,433
)


(379,764
)Loss from discontinued operations


(3,568
)


(3,528
)


(5,885
)


(24,303
)


(37,284
)Extraordinary loss










(13,255
)


(8,876
)


(22,131
)Net loss


(33,125
)


(31,776
)


(68,666
)


(305,612
)


(439,179
)Basic net loss per common share Continuing operations

$
(0.59
)

$
(0.56
)

$
(0.98
)

$
(5.41
)

$
(7.54
)Discontinued operations


(0.07
)


(0.07
)


(0.12
)


(0.48
)


(0.74
)Extraordinary loss










(0.26
)


(0.18
)


(0.44
)Net loss


(0.66
)


(0.63
)


(1.36
)


(6.07
)


(8.72
)Diluted net income (loss) per common shareContinuing operations

$
(0.59
)

$
(0.56
)

$
(0.98
)

$
(5.41
)

$
(7.54
)Discontinued operations


(0.07
)


(0.07
)


(0.12
)


(0.48
)


(0.74
)Extraordinary loss










(0.26
)


(0.18
)


(0.44
)Net loss


(0.66
)


(0.63
)


(1.36
)


(6.07
)


(8.72
)2007Operating revenue

$
377,280


$
391,212


$
411,737


$
403,012


$
1,583,241Income (loss) from continuing operations


6,723



8,913



39,992



(73,855
)


(18,227
)Income (loss) from discontinued operations


757



(921
)


(1,762
)


(50,122
)


(52,048
)Net income (loss)


7,480



7,992



38,230



(123,977
)


(70,275
)Basic net income (loss) per common shareContinuing operations

$
0.13


$
0.18


$
0.80


$
(1.48
)

$
(0.37
)Discontinued operations


0.02



(0.02
)


(0.03
)


(1.00
)


(1.04
)Net income (loss)


0.15



0.16



0.77



(2.48
)


(1.41
)Diluted net income (loss) per common shareContinuing operations

$
0.13


$
0.17


$
0.77


$
(1.48
)

$
(0.37
)Discontinued operations


0.02



(0.02
)


(0.03
)


(1.00
)


(1.04
)Net income (loss)


0.15



0.15



0.74



(2.48
)


(1.41
)     (1)
    
    The sum of per share amounts for the quarters may not equal the
    per share amount for the year due to a variance in shares used
    in the calculations or rounding.(2)
    
    During the fourth quarter of 2008, we recorded an impairment
    charge of $121.8 million related to all of the goodwill for
    our North American business segment. Also, we determined that a
    valuation allowance on the net deferred tax assets was required.
    Because of this, we reversed the tax benefit associated with our
    extraordinary loss recorded in the third quarter. 143




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures    Form 10-K, Rule 13a-15(e) Form 10-Ks Form 10-Qs Form 10-K,
  Form 10-K Form 10-K, Form 10-K Form 10-K Form 10-K Form 10-K Form 10-K.
  Form 10-K
    MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL
    REPORTING
     144




---



##### Table of Contents



Changes in internal control over financial reporting during
    fourth quarter of 2008
    
    our previously disclosed extensive changes in senior management
    and other personnel;
    organizational changes to improve accountability and oversight
    of accounting and financial reporting internal controls;
    increased experienced staffing in finance, accounting and tax;
    increased focus on financial and accounting controls throughout
    the company including development of formal corporate and
    accounting policies, and
    implementation of processes to ensure timely accounting reviews
    for routine and non-routine transactions and accounts.  Form 10-Q Form 10-K
 145




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Stockholders
    and Board of Directors
                 
    146




---



##### Table of Contents



Item 9B.
    Other
    Information     147




---



##### Table of Contents



Part III  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Form 10-K
  Item 11.
    Executive
    Compensation  Form 10-K
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Shareholder Matters  Form 10-K
  Item 13.
    Certain
    Relationships and Related Transactions and Director
    Independence  Form 10-K
  Item 14.
    Principal
    Accountant Fees and Services  Form 10-K
 148




---



##### Table of Contents



Part IV  Item 15.
    Exhibits
    and Financial Statement Schedules  a.
    (1) All financial statements  Form 10-K.
  (2)
    Financial statement schedules       149




---



##### Table of Contents



SIGNATURES      By:
    /s/  Mark
    S. Ordan       PRINCIPAL EXECUTIVE OFFICER

PRINCIPAL FINANCIAL OFFICERBy:

/s/ Mark S. Ordan

By:

/s/ Richard J. NadeauMark S. Ordan, Director and



Richard J. Nadeau, Chief Financial OfficerChief Executive OfficerPRINCIPAL ACCOUNTING OFFICERBy:

/s/ Julie A. PangelinanJulie A. Pangelinan,Chief Accounting OfficerDIRECTORSBy:

/s/ Paul J. KlaassenPaul J. Klaassen, Chair of the BoardBy:

/s/ Glyn F. AeppelGlyn F. Aeppel, DirectorBy:

/s/ Thomas J. DonohueThomas J. Donohue, DirectorBy:

/s/ David I. FuenteDavid I. Fuente, DirectorBy:

/s/ Stephen D. HarlanStephen D. Harlan, DirectorBy:

/s/ J. Douglas HolladayJ. Douglas Holladay, DirectorBy:

/s/ Lynn KromingaLynn Krominga, DirectorBy:

/s/ William G. LittleWilliam G. Little, Director  150




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##### Table of Contents



EXHIBIT INDEX
  INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number2
.1

Stock Purchase Agreement dated as of December 30, 2002 by
    and among Marriott International, Inc., Marriott Senior Holding
    Co., Marriott Magenta Holding Company, Inc. and Sunrise Assisted
    Living, Inc.

10-K

March 27, 2003


2
.32
.2

Amendment No. 1 to Stock Purchase Agreement, dated as of
    March 28, 2003, by and among Marriott International, Inc.,
    Marriott Senior Holding Co., Marriott Magenta Holding Company,
    Inc. and Sunrise Assisted Living, Inc.

8-K

April 9, 2003


2
.22
.3

Master Agreement (CNL Q3 2003 Transaction) dated as of the
    30th day of September, 2003 by and among (i) Sunrise
    Development, Inc., (ii) Sunrise Senior Living Management,
    Inc., (iii) Twenty Pack Management Corp., Sunrise Madison
    Senior Living, L.L.C. and Sunrise Development, Inc.
    (collectively, as the Tenant), (iv) CNL Retirement Sun1
    Cresskill NJ, LP, CNL Retirement Edmonds WA, LP, CNL Retirement
    Sun1 Lilburn GA, LP and CNL Retirement Sun1 Madison NJ LP,
    and(v) Sunrise Senior Living, Inc.

8-K

October 15, 2003


2
.42
.4

Securities Purchase Agreement by and among Sunrise Senior
    Living, Inc., Greystone Partners, Ltd., Concorde Senior Living,
    LLC, Mahalo Limited, Westport Advisors, Ltd., Greystone
    Development Company, LLC, Michael B. Lanahan, Paul F. Steinhoff,
    Jr., Mark P. Andrews and John C. Spooner, dated as of
    May 2, 2005.

10-Q

August 9, 2005


2
.12
.5

Asset Purchase Agreement by and among Sunrise Senior Living
    Investments, Inc., Fountains Continuum of Care Inc. and various
    of its subsidiaries and affiliates, and George B. Kaiser, dated
    as of January 19, 2005.

10-Q

May 10, 2005


10
.12
.6

Facilities Purchase and Sale Agreement by and among Sunrise
    Senior Living Investments, Inc., and Fountains Charitable Income
    Trust and various of its subsidiaries and affiliates, dated as
    of January 19, 2005.

10-Q

May 10, 2005


10
.22
.7

Purchaser Replacement and Release Agreement by and among Sunrise
    Senior Living, Inc. and various of its subsidiaries and
    affiliates and Fountains Charitable Income Trust and various of
    its subsidiaries and affiliates, dated as of February 18,
    2005.

10-Q

May 10, 2005


10
.32
.8

Agreement and Plan of Merger, dated as of August 2, 2006,
    by and among Sunrise Senior Living, Inc., a newly-formed
    indirect wholly owned subsidiary of Sunrise and Trinity Hospice,
    Inc., American Capital Strategies, Ltd. and certain affiliates
    of KRG Capital Partners, LLC, as the principal stockholders of
    Trinity Hospice, Inc.

10-K

March 24, 2008


2
.83
.1

Amended and Restated Certificate of Incorporation of Sunrise,
    effective as of November 14, 2008.

Def 14A

October 20, 2008


A3
.2

Amended and Restated Bylaws of Sunrise, effective as of
    November 14, 2008.

8-K

November 19, 2008


3
.14
.1

Form of Common Stock Certificate

10-K

March 24, 2008


4
.1 151




---



##### Table of Contents



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number4
.2

Rights Agreement between Sunrise Senior Living, Inc. and
    American Stock Transfer & Trust Company, as
    Rights Agent dated April 24, 2006.

8-K

April 21, 2006


4
.14
.3

Amendment, dated as of November 19, 2008, to the Rights
    Agreement, dated as of April 24, 2008, between the
    Corporation and American Stock Transfer &
    Trust Company, as rights agent.

8-K

November 19, 2008


4
.110
.1

1995 Stock Option Plan, as amended.+

10-K

March 31, 1998


10
.2010
.2

1996 Directors Stock Option Plan, as amended.+

10-K

March 31, 1999


10
.3610
.3

1996 Non-Incentive Stock Option Plan, as amended.+

10-Q

May 15, 2000


10
.810
.4

1997 Stock Option Plan, as amended.+

10-K

March 31, 1998


10
.2510
.5

1998 Stock Option Plan.+

10-K

March 31, 1999


10
.4110
.6

1999 Stock Option Plan.+

10-Q

May 13, 1999


10
.110
.7

2000 Stock Option Plan.+

10-K

March 12, 2004


10
.410
.8

2001 Stock Option Plan.+

10-Q

August 14, 2001


10
.1510
.9

2002 Stock Option and Restricted Stock Plan.+

10-Q

August 14, 2002


10
.110
.10

2003 Stock Option and Restricted Stock Plan.+

10-Q

August 13, 2002


10
.110
.11

Forms of equity plan amendment adopted on March 19, 2008
    regarding determination of option exercise price.+

10-K

July 31, 2008


10
.1110
.12

2008 Omnibus Incentive Plan.+

Def 14A

October 20, 2008


B10
.13

Form of Executive Restricted Stock Agreement.+

10-Q

May 10, 2005


10
.410
.14

Form of Restricted Stock Unit Agreement.+

8-K

March 14, 2006


10
.110
.15

Form of Director Stock Option Agreement.+

8-K

September 14, 2005


10
.210
.16

Form of Stock Option Certificate.+

10-K

March 24, 2008


10
.1410
.17

Form of Non-Qualified Stock Option Agreement.+*

N/A

N/A


N/A10
.18

Form of Incentive Stock Option Agreement.+*

N/A

N/A


N/A10
.19

Form of Restricted Stock Agreement.+*

N/A

N/A


N/A10
.20

Restricted Stock Agreement by and between Sunrise Senior Living,
    Inc. and Michael B. Lanahan, dated as of May 10, 2005.+

10-Q

August 9, 2005


10
.210
.21

Form of Sunrise Assisted Living Holdings, L.P. Class A
    Limited Partner Unit Agreement.+

10-K

March 29, 2002


10
.8910
.22

Sunrise Employee Stock Purchase Plan, as amended.+

Def 14A

April 7, 2005


B10
.23

Sunrise Executive Deferred Compensation Plan, effective
    June 1, 2001.+

10-Q

August 14, 2001


10
.1410
.24

Amendment to Sunrise Assisted Living Executive Deferred
    Compensation Plan.+

10-Q

August 13, 2003


10
.210
.25

Second Amendment to Sunrise Assisted Living Executive Deferred
    Compensation Plan.+

10-K

March 24, 2008


10
.2010
.26

Third Amendment to Sunrise Assisted Living Executive Deferred
    Compensation Plan.+

10-K

March 24, 2008


10
.2110
.27

Fourth Amendment to Sunrise Assisted Living Executive Deferred
    Compensation Plan.+

10-K

March 24, 2008


10
.2210
.28

Fifth Amendment to Sunrise Assisted Living Executive Deferred
    Compensation Plan.+

10-K

March 24, 2008


10
.23 152




---



##### Table of Contents



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number10
.29

Greystone Communities Nonqualified Deferred Compensation Plan.+

10-K

July 31, 2008


10
.2510
.30

Bonus Deferral Programs for Certain Executive Officers.+

8-K

March 14, 2006


10
.210
.31

Sunrise Assisted Living, Inc. Long Term Incentive Cash Bonus
    Plan effective August 23, 2002.+

10-Q

November 13, 2002


10
.110
.32

Amendment 1 to the Sunrise Assisted Living, Inc. Long Term
    Incentive Cash Bonus Plan.+

10-K

March 16, 2005


10
.3210
.33

Sunrise Senior Living, Inc. Senior Executive Severance Plan.+

10-K

March 16, 2006


10
.5310
.34

Form of Indemnification Agreement.+

10-K

March 16, 2006


10
.5410
.35

Amended and Restated Employment Agreement dated as of
    November 13, 2003 by and between Sunrise and Paul J.
    Klaassen.+

10-K

March 12, 2004


10
.110
.36

Amendment No. 1 to Amended and Restated Employment
    Agreement by and between Sunrise and Paul J. Klaassen.+

10-K

March 24, 2008


10
.3010
.37

Employment Agreement by and between Sunrise Senior Living, Inc.
    and Michael B. Lanahan, dated as of May 10, 2005.+

10-Q

August 9, 2005


10
.110
.38

Employment Agreement between the Corporation and Mark S. Ordan,
    dated November 13, 2008.+

8-K

November 19, 2008


10
.110
.39

Letter Agreement between the Corporation and Julie Pangelinan,
    dated November 17, 2008.+

8-K

November 19, 2008


10
.210
.40

Separation Agreement and General Release between the Company and
    John F. Gaul, dated December 9, 2008.+

8-K

December 15, 2008


10
.110
.41

Employment Agreement between Sunrise Senior Living, Inc. and
    Julie A. Pangelinan, dated January 14, 2009.+

8-K

January 21 2009


10
.210
.42

Employment Agreement between Sunrise Senior Living, Inc. and
    Daniel J. Schwartz, dated January 16, 2009.+

8-K

January 21 2009


10
.310
.43

Employment Agreement between Sunrise Senior Living, Inc. and
    Greg Neeb, dated January 21, 2009.+

8-K

January 21 2009


10
.410
.44

Employment Agreement between Sunrise Senior Living, Inc.
    and Richard J. Nadeau, dated February 25, 2009.+

8-K

February 26, 2009


10
.110
.45

2008 Non-Employee Director Fees and Other Compensation.+*

N/A

N/A


N/A10
.46

Credit Agreement by and among Sunrise Senior Living, Inc. and
    certain subsidiaries, as the Borrowers, the subsidiaries of the
    Borrower as identified therein, as the Guarantors, Bank of
    America, N.A., as the Administrative Agent, Swing Line Lender
    and L/C Issuer, Wachovia Bank, National Association, as
    Syndication Agent, and other lender parties thereto, dated as of
    December 2, 2005.

8-K

December 8, 2005


10
.110
.47

Pledge, Assignment and Security Agreement between Sunrise Senior
    Living, Inc. and Bank of America, N.A., as Administrative Agent,
    dated as of December 2, 2005.

10-K

March 24, 2008


10
.41 153




---



##### Table of Contents



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number10
.48

First Amendment to Credit Agreement by and among Sunrise Senior
    Living, Inc. and certain subsidiaries, as the Borrowers, the
    subsidiaries of the Borrower as identified therein, as the
    Guarantors, Bank of America, N.A., as the Administrative Agent,
    Swing Line Lender and L/C Issuer, and other lender parties
    thereto, dated as of March 6, 2006.

10-K

March 24, 2008


10
.4210
.49

Second Amendment to the Credit Agreement by and among Sunrise
    Senior Living, Inc. and certain subsidiaries, as the Borrowers,
    the subsidiaries of the Borrower as identified therein, as the
    Guarantors, Bank of America, N.A., as the Administrative Agent,
    Swing Line Lender and L/C Issuer, and other lender parties
    thereto, dated as of January 31, 2007

10-K

March 24, 2008


10
.4310
.50

Third Amendment to Credit Agreement by and among Sunrise Senior
    Living, Inc. and certain subsidiaries, as the Borrowers, the
    subsidiaries of the Borrower as identified therein, as the
    Guarantors, Bank of America, N.A., as the Administrative Agent,
    Swing Line Lender and L/C Issuer, and other lender parties
    thereto, dated as of June 27, 2007.

10-K

March 24, 2008


10
.4410
.51

Fourth Amendment to Credit Agreement by and among Sunrise Senior
    Living, Inc. and certain subsidiaries, as the Borrowers, the
    subsidiaries of the Borrower as identified therein, as the
    Guarantors, Bank of America, N.A., as the Administrative Agent,
    Swing Line Lender and L/C Issuer, and other lender parties
    thereto, dated as of September 17, 2007.

10-K

March 24, 2008


10
.4510
.52

Fifth Amendment to Credit Agreement by and among Sunrise Senior
    Living, Inc. and certain subsidiaries, as the Borrowers, the
    subsidiaries of the Borrower as identified therein, as the
    Guarantors, Bank of America, N.A., as the Administrative Agent,
    Swing Line Lender and L/C Issuer, and other lender parties
    thereto, dated as of January 31, 2008.

10-K

March 24, 2008


10
.4610
.53

Sixth Amendment to Credit Agreement by and among Sunrise Senior
    Living, Inc. and certain subsidiaries, as the Borrowers, the
    subsidiaries of the Borrower as identified therein, as the
    Guarantors, Bank of America, N.A., as the Administrative Agent,
    Swing Line Lender and L/C Issuer, and other lender parties
    thereto, dated as of February 19, 2008.

10-K

March 24, 2008


10
.4710
.54

Pledge, Assignment and Security Agreement between Sunrise Senior
    Living, Inc. and Bank of America, N.A., as Administrative Agent,
    dated as of February 19, 2008

10-K

March 24, 2008


10
.4810
.55

Seventh Amendment to Credit Agreement by and among Sunrise
    Senior Living, Inc. and certain subsidiaries, as the Borrowers,
    the subsidiaries of the Borrower as identified therein, as the
    Guarantors, Bank of America, N.A., as the Administrative Agent,
    Swing Line Lender and L/C Issuer, and other lender parties
    thereto, dated as of March 13, 2008.

10-K

March 24, 2008


10
.49 154




---



##### Table of Contents



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number10
.56

Security Agreement by and among Sunrise Senior Living, Inc. and
    certain subsidiaries, as the Loan Parties, and Bank of America,
    N.A., as the Administrative Agent, Swing Line Lender and L/C
    Issuer, and other lender parties thereto, dated as of
    March 13, 2008.

10-K

March 24, 2008


10
.5010
.57

Eighth Amendment to Credit Agreement by and among Sunrise Senior
    Living, Inc. and certain subsidiaries, as the Borrowers, the
    subsidiaries of the Borrower as identified therein, as the
    Guarantors, Bank of America, N.A., as the Administrative Agent,
    Swing Line Lender and L/C Issuer, and other lender parties
    thereto, dated as of July 23, 2008.

10-K

July 31, 2008


10
.4810
.58

Ninth Amendment to Credit Agreement by and among Sunrise Senior
    Living, Inc. and certain subsidiaries, as the Borrowers, the
    subsidiaries of the Borrower as identified therein, as the
    Guarantors, Bank of America, N.A., as the Administrative Agent,
    Swing Line Lender and L/C Issuer, and other lender parties
    thereto, dated as of November 6, 2008.

10-Q

November 7, 2008


10
.210
.59

Tenth Amendment to Credit Agreement by and among Sunrise Senior
    Living, Inc. and certain subsidiaries, as the Borrowers, the
    subsidiaries of the Borrower as identified therein, as the
    Guarantors, Bank of America, N.A., as the Administrative Agent,
    Swing Line Lender and L/C Issuer, and other lender parties
    thereto, dated as of January 20, 2008.

8-K

January 21, 2009


10
.110
.60

Assumption and Reimbursement Agreement made effective as of
    March 28, 2003, by and among Marriott International, Inc.,
    Sunrise Assisted Living, Inc., Marriott Senior Living Services,
    Inc. and Marriott Continuing Care, LLC.

10-Q

May 15, 2003


10
.410
.61

Assumption and Reimbursement Agreement (CNL) made effective as
    of March 28, 2003, by and among Marriott International,
    Inc., Marriott Continuing Care, LLC, CNL Retirement Properties,
    Inc., CNL Retirement MA3 Pennsylvania, LP, and CNL Retirement
    MA3 Virginia, LP.

10-Q

May 15, 2003


10
.510
.62

Amended and Restated Ground Lease, dated August 29, 2003,
    by and between Sunrise Fairfax Assisted Living, L.L.C. and Paul
    J. Klaassen and Teresa M. Klaassen.

10-K

March 24, 2008


10
.6210
.63

Letter dated March 16, 2008 regarding surrender of bonus
    compensation.+

10-K

March 24, 2008


10
.6510
.64

Multifamily Mortgage, Assignment of Rents and Security Agreement.

8-K

May 12, 2008


10
.110
.65

Discount MBS Multifamily Note.

8-K

May 12, 2008


10
.110
.66

Pre-Negotiation and Standstill Agreement dated December 24,
    2008, by and among Sunrise Senior Living, Inc., Sunrise Hannover
    Senior Living GmbH & Co. KG, Sunrise Hannover GmbH and
    Natixis, London Branch.

8-K

December 24, 2008


10
.110
.67

Standstill Agreement, dated December 23, 2008, by and among
    Sunrise Senior Living, Inc., Sunrise Hannover Senior Living
    GmbH & Co. KG, Sunrise Hannover GmbH and Natixis,
    London Branch.

8-K

December 24, 2008


10
.2 155




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##### Table of Contents



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number21


Subsidiaries of the Registrant.*

N/A

N/A


N/A23
.1

Consent of Ernst & Young LLP*

N/A

N/A


N/A31
.1

Certification of Chief Executive Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.*

N/A

N/A


N/A31
.2

Certification of Chief Financial Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.*

N/A

N/A


N/A32
.1

Certification of Chief Executive Officer Pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.*

N/A

N/A


N/A32
.2

Certification of Chief Financial Officer Pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.*

N/A

N/A


N/A   +
    
    Represents management contract or compensatory plan or
    arrangement.*
    
    Filed herewith. 156