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, 2009
  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.)7900 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-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

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


13Item 1B.


Unresolved Staff Comments


25Item 2.


Properties


25Item 3.


Legal Proceedings


25Item 4.


Submission of Matters to a Vote of Security
    Holders


28PART IIItem 5.


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


29Item 6.


Selected Financial Data


30Item 7.


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


31Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


65Item 8.


Financial Statements and Supplementary Data


66Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


127Item 9A.


Controls and Procedures


127Item 9B.


Other Information


129PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


130Item 11.


Executive Compensation


130Item 12.


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


130Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


130Item 14.


Principal Accounting Fees and Services


130PART IVItem 15.


Exhibits and Financial Statement Schedules


131SIGNATURES









132   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:
  
    our ability to maintain adequate liquidity to operate our
    business and execute our restructuring;
    our ability to repay or extend our loans when they come due
    in 2010 and obtain waivers or reach agreements with respect to
    loans currently in default, including the loans for two of our
    German communities not included in our German restructuring
    agreement;
    our ability to obtain waivers, cure or reach agreements with
    respect to defaults under loans to our ventures;
    our ability to execute the restructuring agreement with the
    lenders to seven of our nine German communities;
    our ability to repay or extend our Bank Credit Facility when
    it is due on December 2, 2010;
    risk of future obligations to fund guarantees and other
    support arrangements to some of our ventures, lenders to the
    ventures or third party owners;
    our ability to achieve anticipated savings from our cost
    reduction program;
    our ability to raise funds from capital sources;
    business conditions and market factors that could affect the
    value of our properties and therefore require further
    impairments of our assets;
    risk of early termination or non-renewal of our management
    agreements;
    risk of declining occupancies in existing communities or
    slower than expected leasing of new communities;
    changes in interest rates;
    the outcome of the U.S. Securities and Exchange
    Commissions (SEC) investigation;
    the outcome of the HCP, Inc. litigation;
    the outcome of the Internal Revenue Service (IRS)
    audit of our tax returns for the tax years ended
    December 31, 2005 through 2008;
    competition and our response to pricing and promotional
    activities of our competitors;
    our ability to comply with government requirements and
    regulations;
    risk of new legislation or regulatory developments;
    unanticipated expenses;
    further 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
          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).  end-of-life
 4




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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
   5




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Assisted Living Extended Levels of Care
    Reminiscence Care
    Independent Living and Skilled Nursing
    Other
    Services
    Managed
    Communities
       6




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2009
    Property Information
      Number of CommunitiesConsolidatedVariable Interest


UnconsolidatedConsolidated


Entities


Ventures


Managed


TotalBeginning number December 31, 2008


62



10



203



160



435Opened (developed by us)


1







22







23Terminations/Sales/ Closures


(23
)


(2
)


(7
)


(42
)


(74
)Expansion/Other adjustments


7



(7
)


(17
)


17



Ending number December 31, 2009


47



1



201



135



384   Total Unit CapacityConsolidatedVariable Interest


UnconsolidatedConsolidated


Entities


Ventures


Managed


TotalBeginning number December 31, 2008


8,205



1,212



20,225



20,209



49,851Opened (developed by us)


99







1,975







2,074Terminations/Sales/ Closures


(1,540
)


(184
)


(2,025
)


(7,992
)


(11,741
)Expansion/Other adjustments


608



(657
)


(3,981
)


4,199



169Ending number December 31, 2009


7,372



371



16,194



16,416



40,353  7




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2009
    Operating Communities
  Number of Communities


Total Unit CapacityUnconsolidated








UnconsolidatedLocation

Consolidated


Ventures


Managed


Consolidated


Ventures


ManagedArizona


2



3



2



233



298



485Arkansas










1











163California


8



30



15



857



2,194



2,226Colorado






8



3







728



479Connecticut






1



1







85



114District of Columbia


1



1



1



100



173



172Delaware






1











69



Florida


5



1



3



1,687



80



945Georgia


1



7



5



30



721



492Illinois


1



14



12



321



1,105



1,340Indiana






1











140



Kansas






3



1







223



152Kentucky






1



1







80



104Louisiana






3



2







209



92Maryland






3



10







289



1,308Maine


2



1







491



180



Massachusetts






9



5







597



324Michigan






11



5







732



848Minnesota






4



6







306



444Missouri






2



3







282



359Nebraska










1











150Nevada






1











79



New Jersey


2



15



9



495



1,091



1,014New York






13



4







1,001



499North Carolina


1



1



7



86



74



843Ohio


6



4



4



345



206



360Oklahoma










3











482Pennsylvania


2



18



1



611



1,325



151South Carolina










1











151Tennessee










1











113Texas


1



5



2



145



463



286Utah






2



1







213



158Virginia


6



7



10



1,439



539



901Washington






1



6







70



514United Kingdom






27











2,265



Germany


7











657







Canada


3



3



9



246



377



747Total


48



201



135



7,743



16,194



16,416   Company
    Operations
  Operating
    Structure
    North American Management
  North American Development
 8




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Equity Method Investments
  Consolidated (Wholly Owned/Leased)
  United Kingdom
  Germany
    Senior
    Living Operations
          Community
    Staffing
  day-to-day
   9




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Staff
    Education and Training
    one-to-one
  Quality
    Improvement Processes
    Sales and
    Marketing
      Competition
   10




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Government
    Regulation
  Senior Living.
  
    personnel hiring, 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
     11




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Other
    Employees
  Form 10-K,
  Website
  http://www.sunriseseniorliving.com. Form 10-K, Form 10-Q, Form 8-K,
  http://www.sec.gov Form 10-K.
  (800) 732-0330
 12




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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;
    Risks related to our business operations;
    Risks related to the pending SEC investigation and other
    pending litigation;
    Risks related to the senior living industry; and
    Risks related to our organization and structure.  Liquidity
    Risks
  As described in Significant 2009 and 2010 Developments in
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations, 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.
    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.
     13




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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
  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;
    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.       14




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The failure of our 2009 cost reduction plan to achieve
    sufficient expense savings.
    Our ability to execute our plan to sell certain
    assets.
    Risks
    Related to Our Business Operations
  The current economic environment could affect our ability
    to obtain financing for various purposes, including any
    refinancing of our Bank Credit Facility or other debt due in
    2010 and 2011, 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.
  and/or
   15




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Termination of resident agreements and vacancies in
    communities could adversely affect our revenues and
    earnings.
    Our international operations are subject to a variety of
    risks that could adversely affect those operations and thus our
    profitability and operating results.
    Early termination or non-renewal of our management
    agreements could cause a loss in revenues.
       16




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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.
    Ownership of the communities we manage is heavily
    concentrated with three of our business partners. We are in
    material litigation with one of the three.
        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 or have lesser decision-making authority with certain
    of 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; 17




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
    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;
    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.
       18




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Interest rate increases could adversely affect our
    earnings because a portion of our total debt is floating rate
    debt.
    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.
  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.
   19




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clean-up
    Unionization may impact wage rates and work rules.
    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 has resulted in
    significant costs and expenses, diverted resources and could
    have a material adverse effect on our business, financial
    condition and results of operations.
      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, and/or
 20




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The IRS audit may result in substantial fines and
    penalties, which could harm our financial condition, results of
    operations and cash flow.
  Form 10-K,
  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.
   21




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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
  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
 22




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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.
   23




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
    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 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 24




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##### 



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.    Our Board of Directors has adopted a stockholder rights
    agreement 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    Item 2.
    Properties      Item 3.
    Legal
    Proceedings  HCP
   25




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##### 



Trinity
    OIG Investigation and Qui Tam Action
  qui tam
  IRS
    Audit
      SEC
    Investigation
   26




---



##### 



Putative
    Class Action Litigation
          Putative
    Shareholder Derivative Litigation
       27




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

For

Withhold Authority to VoteGlyn F. Aeppel


39,532,630



4,034,866Thomas J. Donohue


31,982,908



11,584,588David I. Fuente


35,032,038



8,535,458Stephen D. Harlan


37,909,369



5,658,127J. Douglas Holladay


31,255,369



12,312,127William G. Little


34,037,014



9,530,482      28




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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, 2009

$
2.03


$
0.28June 30, 2009

$
3.06


$
0.59September 30, 2009

$
3.24


$
1.26December 31, 2009

$
5.89


$
2.26   Quarter Ended

High

LowMarch 31, 2008

$
30.65


$
16.27June 30, 2008

$
27.21


$
20.19September 30, 2008

$
22.30


$
12.91December 31, 2008

$
14.67


$
0.27   Holders
    Dividends
    Issuer
    Purchases of Equity Securities
    Issuance
    of Common Stock
   29




---



##### 



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

2009(1)(2)


2008(1)(2)


2007(1)(2)


2006(1) (2)(3)(4)


2005 (1)(3)(5)STATEMENTS OF OPERATIONS DATA:Operating revenues

$
1,464,144


$
1,570,974


$
1,482,020


$
1,537,263


$
1,439,248Operating expenses


1,596,163



1,918,622



1,682,143



1,591,246



1,399,584(Loss) income from operations


(132,019
)


(347,648
)


(200,123
)


(53,983
)


39,663Gain on the sale and development of real estate and equity
    interests


21,651



17,374



105,081



51,347



81,723Sunrises share of earnings, return on investment in
    unconsolidated communities and (loss) gain from investments
    accounted for under profit-sharing method


(7,135
)


(15,175
)


107,369



42,845



12,615(Loss) income from continuing operations


(113,244
)


(326,590
)


(2,475
)


31,287



92,985Loss from discontinued operations, net of tax


(20,271
)


(117,516
)


(70,512
)


(9,087
)


(3,200
)Net (loss) income


(133,915
)


(439,179
)


(70,275
)


15,284



83,064Net (loss) income per common share:BasicContinuing operations

$
(2.22
)

$
(6.48
)

$
(0.05
)

$
0.43


$
2.08Discontinued operations, net of tax


(0.39
)


(2.24
)


(1.36
)


(0.12
)


(0.08
)Net (loss) income

$
(2.61
)

$
(8.72
)

$
(1.41
)

$
0.31


$
2.00DilutedContinuing operations

$
(2.22
)

$
(6.48
)

$
(0.05
)

$
0.42


$
1.82Discontinued operations, net of tax


(0.39
)


(2.24
)


(1.36
)


(0.12
)


(0.08
)Net (loss) income

$
(2.61
)

$
(8.72
)

$
(1.41
)

$
0.30


$
1.74BALANCE SHEET DATA:Total current assets

$
340,434


$
304,908


$
529,964


$
361,998


$
326,888Total current liabilities


673,559



735,421



646,311



451,982



280,684Property and equipment, net


288,056



681,352



656,211



609,385



494,069Property and equipment subject to a sales contract, net














193,158



255,231Property and equipment subject to financing, net










58,871



62,520



64,174Goodwill






39,025



169,736



218,015



153,328Total assets


910,589



1,381,557



1,798,597



1,848,301



1,587,785Total debt


440,219



636,131



253,888



190,605



248,396Deposits related to properties subject to a sale contract














240,367



324,782Liabilities related to properties accounted for under the
    financing method










54,317



66,283



64,208Deferred income tax liabilities


23,862



28,129



82,605



78,632



70,638Total liabilities


884,355



1,233,643



1,214,826



1,201,078



1,094,209Total stockholders equity


26,234



147,914



583,771



647,223



493,576OPERATING AND OTHER DATA:Cash dividends per common share

$



$



$



$



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


48



72



62



61



58Communities in unconsolidated ventures


201



203



199



180



153Communities managed for third party owners


135



160



174



177



183Total


384



435



435



418



394Unit capacity:Consolidated communities


7,743



9,417



8,348



8,423



8,141Communities in unconsolidated ventures


16,194



20,225



19,765



18,178



14,507Communities managed for third party owners


16,416



20,209



21,366



21,412



24,353Total


40,353



49,851



49,479



48,013



47,001     (1)
    
    We recorded impairment charges related to owned communities and
    land parcels of $31.7 million, $27.8 million,
    $7.6 million, $15.7 million and $2.5 million in
    2009, 2008, 2007, 2006 and 2005, respectively. We recorded
    impairment of goodwill of $121.8 million in 2008. We
    recorded restructuring charges of $33.3 million 30




---



##### 



and $24.2 million in 2009 and 2008, respectively. We
    wrote-off capitalized project costs of $14.9 million,
    $95.8 million, $28.4 million, $1.3 million and
    $1.0 million in 2009, 2008, 2007, 2006 and 2005,
    respectively.(2)
    
    We incurred costs of $3.9 million, $30.2 million,
    $51.7 million and $2.6 million in 2009, 2008, 2007 and
    2006, respectively, related to Accounting Restatement, Special
    Independent Committee inquiry, SEC investigation and stockholder
    litigation.(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 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
        North American Management
  North American Development
  Equity Method Investments
  Consolidated (Wholly Owned/Leased)
  United Kingdom
  Germany
 31




---



##### 



Significant
    2009 and 2010 Developments
  Overview
      Asset
    Sales
      Fountains
    Venture
    
    Transferred our 20-percent ownership interest in the Fountains
    venture to our venture partner;
    Contributed vacant land parcels adjacent to six of the Fountains
    communities and owned by us to the Fountains venture; 32




---



##### 




    Agreed to transfer management of the 16 Fountains communities as
    soon as the transition closing conditions are met and the new
    manager has obtained the regulatory approvals necessary to
    assume control of the facilities; and
    Repaid the venture the management fee we had earned to date in
    2009 of $1.8 million.    Greystone
  7-year
  Aston
    Gardens
    Restructuring
    Plan
      1 24
 33




---



##### 



Results
    of Operations
    Percent ChangeYear Ended December 31,


2009 vs.


2008 vs.(In thousands)

2009


2008


2007


2008


2007Operating revenue:Management fees

$
112,467


$
131,586


$
122,293



(14.5
)%


7.6
%Resident fees for consolidated communities


350,278



340,975



323,007



2.7
%


5.6
%Ancillary fees


45,397



42,535



51,127



6.7
%


(16.8
)%Professional fees from development, marketing and other


13,193



44,447



29,546



(70.3
)%


50.4
%Reimbursed costs incurred on behalf of managed communities


942,809



1,011,431



956,047



(6.8
)%


5.8
%Total operating revenue


1,464,144



1,570,974



1,482,020



(6.8
)%


6.0
%Operating expenses:Community expense for consolidated communities


268,319



257,555



231,780



4.2
%


11.1
%Community lease expense


59,344



59,843



62,307



(0.8
)%


(4.0
)%Depreciation and amortization


46,629



39,497



42,601



18.1
%


(7.3
)%Ancillary expense


42,457



40,202



53,294



5.6
%


(24.6
)%General and administrative


119,905



157,509



183,546



(23.9
)%


(14.2
)%Development expense


12,501



34,134



35,076



(63.4
)%


(2.7
)%Write-off of capitalized project costs


14,879



95,763



28,430



(84.5
)%


236.8
%Accounting Restatement and Special Independent Committee
    inquiry, SEC investigation and pending stockholder litigation


3,887



30,224



51,707



(87.1
)%


(41.5
)%Restructuring cost


33,313



24,178







37.8
%


N/AProvision for doubtful accounts


13,625



20,077



7,709



(32.1
)%


160.4
%Loss on financial guarantees and other contracts


2,053



5,022



22,005



(59.1
)%


(77.2
)%Impairment of owned communities and land parcels


31,685



27,816



7,641



13.9
%


264.0
%Impairment of goodwill and intangible assets






121,828







N/A



N/ACosts incurred on behalf of managed communities


947,566



1,004,974



956,047



(5.7
)%


5.1
%Total operating expenses


1,596,163



1,918,622



1,682,143



(16.8
)%


14.1
%Loss from operations


(132,019
)


(347,648
)


(200,123
)


(62.0
)%


73.7
%Other non-operating income (expense):Interest income


1,351



6,267



9,492



(78.4
)%


(34.0
)%Interest expense


(10,301
)


(6,709
)


(5,179
)


53.5
%


29.5
%Loss on investments


3,556



(7,770
)






NM



N/AOther income (expense)


5,773



(20,066
)


(5,792
)


NM



246.4
%Total other non-operating income (expense)


379



(28,278
)


(1,479
)


NM



1812.0
%Gain on the sale and development of real estate and equity
    interests


21,651



17,374



105,081



24.6
%


(83.5
)%Sunrises share of earnings (loss) and return on investment
    in unconsolidated communities


5,673



(13,846
)


107,347



NM



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


(12,808
)


(1,329
)


22



863.7
%


NM(Loss) income before provision for income taxes and discontinued
    operations


(117,124
)


(373,727
)


10,848



(68.7
)%


NMBenefit from (provision for) income taxes


3,880



47,137



(13,323
)


(91.8
)%


NMLoss before discontinued operations


(113,244
)


(326,590
)


(2,475
)


(65.3
)%


13095.6
%Discontinued operations, net of tax


(20,271
)


(117,516
)


(70,512
)


(82.8
)%


66.7
%Net loss


(133,515
)


(444,106
)


(72,987
)


(69.9
)%


508.5
%Less: (Income) loss attributable to noncontrolling interests,
    net of tax


(400
)


4,927



2,712



NM



81.7
%Net loss

$
(133,915
)

$
(439,179
)

$
(70,275
)


(69.5
)%


524.9
%  34




---



##### 



For the Year Ended December 31, 2009Consolidated








UnallocatedEquity


(Wholly





Germany


CorporateNorth American


North American


Method


Owned/


United


Management


andManagement


Development


Investments


Leased)


Kingdom


Company


Eliminations


TotalRevenues

$
1,105,974


$
6,637


$
2,151


$
350,165


$
27,597


$
1,717


$
(30,097
)

$
1,464,144Community expense


2,170



214



42



287,719







158



(21,984
)


268,319Development expense


25



9,347



606



312



1,682



128



401



12,501Depreciation and amortization


11,925



1,927







17,550



382



114



14,731



46,629Other operating expenses


1,058,795



25,285



6,306



61,198



25,009



4,672



55,764



1,237,029Impairment of owned communities, land parcels, goodwill and
    intangibles






28,897







2,953











(165
)


31,685Income (loss) from operations


33,059



(59,033
)


(4,803
)


(19,567
)


524



(3,355
)


(78,844
)


(132,019
)Interest income


413



869



7



225



(10
)


11



(164
)


1,351Interest expense


(169
)


(926
)






(4,866
)






(29
)


(4,311
)


(10,301
)Foreign exchange gain/(loss)














7,989



(632
)


(645
)






6,712Sunrises share of earnings (losses) and return on
    investment in unconsolidated communities










5,872















(199
)


5,673Income (loss) before income taxes, discontinued operations, and
    noncontrolling interests


37,080



(53,678
)


1,076



(16,707
)


(913
)


(4,146
)


(79,836
)


(117,124
)Investments in unconsolidated communities










64,971



















64,971Segment assets


141,389



71,061



71,124



295,062



13,862



105,763



212,328



910,589Expenditures for long-lived assets






9,794







10,111



45











19,950Deferred gains on the sale of real estate and deferred revenue






16,865



















5,000



21,865   For the Year Ended December 31, 2008Consolidated








UnallocatedEquity


(Wholly





Germany


CorporateNorth American


North American


Method


Owned/


United


Management


andManagement


Development


Investments


Leased)


Kingdom


Company


Eliminations


TotalRevenues

$
1,189,971


$
27,425


$
2,303


$
340,834


$
32,803


$
11,104


$
(33,466
)

$
1,570,974Community expense


(535
)


774



122



282,051







60



(24,917
)


257,555Development expense


5,065



21,405



3,121



15



4,335



16



177



34,134Depreciation and amortization


6,969



1,132



88



15,491



331



114



15,372



39,497Other operating expenses


1,130,122



113,672



19,556



60,480



22,749



15,322



75,891



1,437,792Impairment of ownedcommunities, land parcels,goodwill and intangibles


121,553



5,870



6,350



15,871















149,644Income (loss) from operations


(73,203
)


(115,428
)


(26,934
)


(33,074
)


5,388



(4,408
)


(99,989
)


(347,648
)Interest income


825



425



836



289



621



265



3,006



6,267Interest expense


(287
)


(1,260
)


(366
)


(4,471
)






(94
)


(231
)


(6,709
)Foreign exchange gain/(loss)






(9,796
)






(4,399
)


(3,075
)


2,620







(14,650
)Sunrises share of losses and return on investment in
    unconsolidated communities










(13,816
)














(30
)


(13,846
)Income (loss) before income taxes, discontinued operations, and
    noncontrolling interests


(72,282
)


(112,091
)


(39,996
)


(40,670
)


2,936



(2,218
)


(109,406
)


(373,727
)Investments in unconsolidated communities










66,852



















66,852Goodwill


























39,025



39,025Segment assets


192,079



184,786



80,836



422,980



21,929



152,094



326,853



1,381,557Expenditures for long-lived assets






137,449







16,723



19,270



103







173,545Deferred gains on the sale of real estate and deferred revenue






26,291



















62,415



88,706  35




---



##### 



As of December 31,


Percent Change2009 vs.


2008 vs.2009


2008


2007


2008


2007Total communitiesConsolidated


47



62



61



(24.2
)%


1.6
%Variable Interest Entities


1



10



1



N/A



N/AUnconsolidated


201



203



199



(1.0
)%


2.0
%Managed


135



160



174



(15.6
)%


(8.0
)%Total


384



435



435



(11.7
)%


0.0
%Unit capacity


40,353



49,851



49,479



(19.1
)%


0.8
%   Adjusted
    Income (Loss) from Ongoing Operations
      Twelve Months EndedDecember 31,2009


2008


2007Loss from operations

$
(132,019
)

$
(347,648
)

$
(200,123
)Non-cash expenses:Depreciation and amortization


46,629



39,497



42,601Write-off of capitalized project costs


14,879



95,763



28,430Provision for doubtful accounts


13,625



20,077



7,709Stock compensation


2,979



3,176



7,020Impairment of long-lived assets


31,685



149,644



7,641Loss from operations after adjustment for non-cash expenses


(22,222
)


(39,491
)


(106,722
)Accounting Restatement, Special Independent Committee inquiry,
    SEC investigation and stockholder litigation


3,887



30,224



51,707Restructuring costs


33,313



24,178



Adjusted income (loss) from ongoing operations

$
14,978


$
14,911


$
(55,015
)   Operating
    Revenue
  Management
    fees and buyout fees
      
    $7.7 million decrease related to management fees from the
    Fountains venture;
    $6.0 million decrease primarily due to lower occupancy; 36




---



##### 




    $5.3 million decrease as a result of terminated management
    contracts;
    $2.0 million decrease in incentive management fees;
    partially offset by
    $1.0 million increase related to international communities;
    $2.6 million increase from communities in the
    lease-up
    phase; and
    $3.2 million increase from an increase in average daily
    rates.      
    $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;
    $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; partially offset by
    $2.4 million decrease from terminated management
    contracts; and
    $1.9 million decrease in incentive management fees.  Resident
    fees for consolidated communities
      
    $7.8 million from the addition of three consolidated
    Canadian communities and one domestic community;
    $5.1 million from increases in average daily rates;
    partially offset by a
    $3.6 million decrease due to lower occupancy.      
    $21.4 million from existing consolidated communities
    primarily resulting from increases in average daily rates;
    $1.8 million from the addition of three consolidated
    Canadian communities that were opened during 2008; partially
    offset by a
    $5.2 million decrease from two communities previously
    accounted for under the financing method of accounting in 2007. 37




---



##### 



Ancillary
    fees
  (In millions)

2009


2008


2007New York Health Care Services

$
38.5


$
35.3


$
30.6Fountains Health Care Services


5.1



5.5



5.9International Health Care Services


1.8



1.7



6.1At Home










8.5$
45.4


$
42.5


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

2009


2008


2007North America

$
7.2


$
26.1


$
8.2International


6.0



18.3



21.3$
13.2


$
44.4


$
29.5           Reimbursed
    costs incurred on behalf of managed communities
          Operating
    Expenses
  Community
    expense for consolidated communities
   38




---



##### 




    $7.2 million from the addition of three Canadian
    communities and one domestic community;
    $2.1 million from existing communities due to increased
    labor costs partially offset by reductions in food and repairs
    and maintenance; and
    $2.6 million from an insurance credit in 2008.      
    $19.6 million from existing communities resulting primarily
    from increased labor, utility, and repairs and maintenance
    costs; and
    $4.0 million from the addition of three Canadian
    communities that were opened during 2008.  Community
    lease expense
          Depreciation
    and amortization
    (In thousands)

2009


2008


2007North America

$
44,586


$
38,201


$
41,715International


2,043



1,296



886$
46,629


$
39,497


$
42,601          39




---



##### 



Ancillary
    expenses
  (In millions)

2009


2008


2007New York Health Care Services

$
35.8


$
33.3


$
32.7Fountains Health Care Services


4.8



5.1



5.7International Health Care Services


1.9



1.8



6.1At Home










8.8$
42.5


$
40.2


$
53.3   General
    and administrative
      
    $11.6 million decrease in salaries and bonus as a result of
    our cost reduction program;
    $17.0 million decrease in general corporate expenses
    including information technology costs, training and education
    and temporary help;
    $4.4 million decrease in travel;
    $7.2 million decrease in bonus expense related to one of
    our ventures;
    $1.5 million decrease related to an employee litigation
    settlement in 2008;
    $1.2 million decrease due to a 2008 penalty related to one
    of our communities; partially offset by
    $5.1 million increase in executive deferred compensation
    costs.      Development
    expense
      
    $11.2 million decrease in development labor costs; and
    $10.5 million decrease in development related expenses
    including travel, insurance, professional fees, legal,
    telecommunication, and other costs.      
    $7.1 million increase in development labor costs and other
    expenses; offset by
    $8.1 million decrease in project costs that were not
    capitalized as the projects were not considered probable. 40




---



##### 



Write-off
    of capitalized project costs
    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
       41




---



##### 



Impairment
    of owned communities, land parcels, goodwill and intangible
    assets
        Costs
    incurred on behalf of managed communities
    Other
    Non-operating Income (Expense)
      
    $4.9 million decrease in interest income;
    $3.6 million increase in interest expense due to a decrease
    in interest capitalized as a result of communities under
    construction being put into operation;
    $11.3 million decrease in net losses on our investments in
    auction rate securities which are classified as trading
    securities and carried at fair value; and
    $6.7 million for net foreign exchange gains in 2009
    comprised of the $8.0 million of gain related to the
    Canadian dollar, $(0.6) million and $(0.7) million of
    loss related to the British pound and Euro, respectively,
    compared to $(14.6) million of net foreign exchange losses
    in 2008 comprised of $(14.2) million and
    $(3.1) million of loss related to the Canadian dollar and
    British pound, respectively, and $2.7 million of gain
    related to the Euro.      
    $1.5 million increase in interest expense due to increased
    borrowings;
    $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
    $(14.6) 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
    and $(3.1) million in losses related to the Canadian dollar
    and to the British pound, respectively, and $2.7 million in
    gain related to the Euro. In 2007, 42




---



##### 



exchange gains of $7.2 million related to the Canadian
    dollar and losses of $(3.2) million and $(6.3) million
    related to the British pound and Euro, respectively.  Gain
    on the Sale and Development of Real Estate and Equity
    Interests
    December 31,2009


2008


2007Properties accounted for under basis of performance of services

$
10.5


$
9.6


$
3.6Properties accounted for previously under financing method






0.5



32.8Properties accounted for previously under deposit method


3.4



0.9



52.4Properties accounted for under the profit-sharing method


8.9



6.7



Land and community sales


(0.4
)


(0.9
)


5.7Condominium sales


(1.0
)


1.0



Sales of equity interests and other sales


0.3



(0.4
)


10.6Total gains on the sale and development of real estate and
    equity interests

$
21.7


$
17.4


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

2009


2008


2007Sunrises share of earnings (losses) inunconsolidated communities

$
3.7


$
(31.0
)

$
60.7Return on investment in unconsolidatedcommunities


10.6



33.4



71.1Impairment of equity investments


(8.6
)


(16.2
)


(24.5
)Sunrises share of earnings (losses) oninvestment in unconsolidated communities

$
5.7


$
(13.8
)

$
107.3     lease-up
 43




---



##### 



44




---



##### 



(Loss)
    Income from Investments Accounted for Under the Profit Sharing
    Method
    December 31,2009


2008


2007Revenue

$
14,219


$
16,635


$
23,791Operating expenses


(18,849
)


(11,459
)


(15,301
)Interest expense


(6,195
)


(597
)


(2,149
)Impairment loss


(1,146
)






(Loss) income from operations before depreciation


(11,971
)


4,579



6,341Depreciation expense


1,489







Distributions to other investors


(2,326
)


(5,908
)


(6,319
)(Loss) income from investments accounted forunder the profit-sharing method

$
(12,808
)

$
(1,329
)

$
22     Benefit
    from (Provision for) Income Taxes
    Discontinued
    Operations
      For the Years Ended December 31,(In thousands)

2009


2008


2007Revenue

$
107,644


$
170,430


$
170,530Expenses


(113,644
)


(231,834
)


(208,884
)Impairments


(72,524
)


(18,748
)


(56,729
)Other (expense) income


(15,871
)


(15,900
)


231Gain on sale of real estate


74,124



1,094



Income taxes






(427
)


24,340Extraordinary loss, net of tax






(22,131
)


Loss from discontinued operations

$
(20,271
)

$
(117,516
)

$
(70,512
)  45




---



##### 



Segment
    Analysis  2009 Compared to 2008
  Overview
  and/or
    North
    American Management
     46




---



##### 



North
    American Development
        Equity
    Method Investments
      Sunrises Share
    of Earnings (Losses) and Return on Investment in Unconsolidated
    Communities
    Consolidated
    (Wholly Owned/Leased)
     47




---



##### 



United
    Kingdom
        German
    Management Company
        Unallocated
    Corporate and Eliminations
     48




---



##### 



Liquidity
    and Capital Resources
  Overview
          Debt
    and Bank Credit Facility
  Debt
    December 31,


December 31,2009


2008Community mortgages

$
112,660


$
241,851German communities(1)


198,680



185,901Bank Credit Facility


33,728



95,000Land loans


33,327



37,407Other


25,557



30,655Variable interest entity


23,225



23,905Margin loan (auction rate securities)


13,042



21,412$
440,219


$
636,131     (1)
    
    The face amount of the debt related to the German communities
    was $215.2 million at December 31, 2009. Excludes
    $10.5 million of accrued interest on the German debt as of
    December 31, 2009 which is reflected in Liabilities
    associated with German assets held for sale on our consolidated
    balance sheet. 49




---



##### 



Mortgages,





Variable


GermanyBank Credit


Wholly-Owned


Land


Interest


VentureFacility


Properties


Loans


Entity Debt


Debt(1)


Other


TotalPast due

$



$
1,398


$
27,107


$
1,365


$
1,723


$



$
31,5932010


33,728



76,278



6,220



715



71,655



38,599



227,1952011






34,984







740



95,590







131,3142012














775



29,712







30,4872013














810











8102014














840











840Thereafter














17,980











17,980$
33,728


$
112,660


$
33,327


$
23,225


$
198,680


$
38,599


$
440,219       December 31,2009German communities

$
198,680Community mortgages


36,382Variable interest entity


23,225Land loans


33,327Other


25,557$
317,171       1st Qtr.


2nd Qtr.


3rd Qtr.


4th Qtr.2010


2010


2010


2010


Thereafter


TotalBank Credit Facility

$



$



$



$
33,728


$



$
33,728Community mortgages






41,773







34,505







76,278Margin loan (auction rate securities)














13,042







13,042$



$
41,773


$



$
81,275


$



$
123,048   Germany
    Venture
   50




---



##### 



51




---



##### 



Mortgage
    Financing
        Bank
    Credit Facility
    
    extended the maturity date to December 2, 2010;
    removed all existing financial covenants other than the minimum
    liquidity covenant;
    renewed existing letters of credit;
    modified the minimum liquidity covenant to not less than
    $10.0 million of unrestricted cash on hand the last day of
    the month;
    modified the restriction on the disposal of assets to include
    disposition of certain assets as long as 50% of the net sale
    proceeds are allocated to the lenders; and
    permanently reduced the commitment after future principal
    repayments or cancellation of letters of credit.      Other
    Debt
   52




---



##### 



Guarantees
      ASC


ASC





FundingsGuarantee


Contingencies


Total


FromTopic Liability


Topic Liability


Liability


January 1,for Future


for Future


for Future


2009Maximum Potential


Fundings at


Fundings at


Fundings at


ThroughAmount of Future


December 31,


December 31,


December 31,


December 31,Guarantee Type

Fundings


2009


2009


2009


2009Operating deficit


Uncapped


$
323


$
500


$
823


$
Other


















125Total





$
323


$
500


$
823


$
125   Senior
    Living Condominium Project
      Agreements
    with Marriott International, Inc.
   53




---



##### 



Other
      Contractual
    Obligations
      Payments due by periodMoreLess Than








ThanContractual Obligations

Total


1 Year


1-3 Years


4-5 Years


5 YearsLong-Term Debt ObligationsDebt

$
406,491


$
225,060


$
161,801


$
1,650


$
17,980Bank Credit Facility


33,728



33,728











Capital Lease Obligations


















Operating Lease Obligations


398,504



61,196



115,031



74,757



147,520Purchase Obligations(1)


















Other Long-Term Liabilities(2)Equity investments in unconsolidated entities


3,724



3,724











Total

$
842,447


$
323,708


$
276,832


$
76,407


$
165,500     (1)
    
    We have various standing or renewable contracts with vendors.
    These contracts are all cancellable with minimal or no
    cancellation penalties. Contract terms are generally one year or
    less.(2)
    
    In addition to the obligations in the table above, approximately
    $19 million of unrecognized tax benefits have been recorded
    as liabilities and we are uncertain as to if or when such
    amounts may be settled.  Cash
    Flows
   54




---



##### 



Market
    Risk
   55




---



##### 



Maturity Date

Fixed Rate


Variable RateThrough December 31,

Debt


Debt2010

$
1,365


$
257,4232011






131,3142012






30,4872013






8102014






840Thereafter






17,980Total Carrying Value

$
1,365


$
438,854Average Interest Rate


6.7
%


2.9
%Estimated Fair Market Value

$
1,365


$
375,614       Critical
    Accounting Estimates
      Impairment
    of Intangible Assets, Long-Lived Assets and Investments in
    Ventures
   56




---



##### 



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.         57




---



##### 



Nature of Estimates Required  Investments in
    Ventures.
    Assumptions and Approach Used.
        Loss
    Reserves for Self-Insured Programs
  Nature of Estimates Required.
   58




---



##### 



Assumptions and Approach Used for Self-Insured
    Risks.
  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.
   59




---



##### 



Assumptions.
  2009-17 2009-17) Consolidations (Topic 810) Improvements to Financial
    Reporting by Enterprises Involved with Variable Interest
    Entities. 2009-17 2009-17 2009-17, 2009-17 2009-17 2009-17,
  Valuation
    of Deferred Tax Assets
  Nature of Estimates Required.
  
  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; 60




---



##### 




    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
    Evaluation and Nature of Estimates
    Required.
           61




---



##### 



Interest and Penalties.
  Assumptions.
  Accounting
    for Financial Guarantees
    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. 62




---



##### 



Litigation
  and/or
  New
    Accounting Standards
                other-than-temporary
 63




---



##### 



2009-05, Fair Value Measurements and Disclosures (Topic
    820)  Measuring Liabilities at Fair Value 2009-05). 2009-05 2009-05 2009-05
  Future
    Adoption of Accounting Standards
  2009-17, Consolidations (Topic 810) Improvements to Financial
    Reporting by Enterprises Involved with Variable Interest
    Entities 2009-17 2009-17 2009-17 2009-17
  2009-13, Revenue Recognition (Topic 605) 
    Multiple-Deliverable Revenue Arrangements 2009-13). 605-25. 2009-13 2009-13
  Impact of
    Inflation
   64




---



##### 



Item 7A.
    Quantitative
    and Qualitative Disclosure About Market Risk   65




---



##### 



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


67Consolidated Balance Sheets


68Consolidated Statements of Operations


69Consolidated Statements of Changes in
    Stockholders Equity


70Consolidated Statements of Cash Flows


71Notes to Consolidated Financial Statements


72PS UK Investment (Jersey) LP*PS Germany Investment (Jersey) LP*AL US Development Venture, LLC*Sunrise Aston Gardens Venture, LLC*    *
    
    To be filed by amendment as soon as these financial statements
    become available. 66




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM               
    67




---



##### 



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

December 31,


December 31,2009


2008ASSETSCurrent Assets:Cash and cash equivalents

$
39,283


$
29,513Accounts receivable, net


37,304



54,842Income taxes receivable


5,371



30,351Due from unconsolidated communities


19,673



45,255Deferred income taxes, net


23,862



25,341Restricted cash


39,365



37,392Assets held for sale


40,658



49,076German assets held for sale


104,720



Prepaid expenses and other current assets


30,198



33,138Total current assets


340,434



304,908Property and equipment, net


288,056



681,352Due from unconsolidated communities


13,178



31,693Intangible assets, net


53,024



70,642Goodwill






39,025Investments in unconsolidated communities


64,971



66,852Investments accounted for under the profit-sharing method


11,031



22,005Restricted cash


110,402



123,772Restricted investments in marketable securities


20,997



31,080Other assets, net


8,496



10,228Total assets

$
910,589


$
1,381,557LIABILITIES AND EQUITYCurrent Liabilities:Current maturities of debt

$
207,811


$
377,449Outstanding draws on bank credit facility


33,728



95,000Debt relating to German assets held for sale


198,680



Accounts payable and accrued expenses


138,032



184,144Liabilities associated with German assets held for sale


12,632



Due to unconsolidated communities


2,180



914Deferred revenue


5,364



7,327Entrance fees


33,157



35,270Self-insurance liabilities


41,975



35,317Total current liabilities


673,559



735,421Debt, less current maturities






163,682Investment accounted for under the profit-sharing method






8,332Guarantee liabilities


823



13,972Self-insurance liabilities


58,225



68,858Deferred gains on the sale of real estate and deferred revenues


21,865



88,706Deferred income tax liabilities


23,862



28,129Other long-term liabilities, net


106,021



126,543Total liabilities


884,355



1,233,643Equity: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, 55,752,217 and50,872,711 shares issued and outstanding, net of 401,353
    and 342,525 treasury shares, at December 31, 2009 and 2008,
    respectively


558



509Additional paid-in capital


474,158



458,404Retained loss


(460,971
)


(327,056
)Accumulated other comprehensive income


8,302



6,671Total stockholders equity


22,047



138,528Noncontrolling interests


4,187



9,386Total equity


26,234



147,914Total liabilities and equity

$
910,589


$
1,381,557    68




---



##### 



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

2009


2008


2007Operating revenue:Management fees

$
112,467


$
131,586


$
122,293Resident fees for consolidated communities


350,278



340,975



323,007Ancillary fees


45,397



42,535



51,127Professional fees from development, marketing and other


13,193



44,447



29,546Reimbursed costs incurred on behalf of managed communities


942,809



1,011,431



956,047Total operating revenues


1,464,144



1,570,974



1,482,020Operating expenses:Community expense for consolidated communities


268,319



257,555



231,780Community lease expense


59,344



59,843



62,307Depreciation and amortization


46,629



39,497



42,601Ancillary expenses


42,457



40,202



53,294General and administrative


119,905



157,509



183,546Development expense


12,501



34,134



35,076Write-off of capitalized project costs


14,879



95,763



28,430Accounting Restatement, Special Independent Committee inquiry,SEC investigation and stockholder litigation


3,887



30,224



51,707Restructuring costs


33,313



24,178



Provision for doubtful accounts


13,625



20,077



7,709Loss on financial guarantees and other contracts


2,053



5,022



22,005Impairment of owned communities and land parcels


31,685



27,816



7,641Impairment of goodwill and intangible assets






121,828



Costs incurred on behalf of managed communities


947,566



1,004,974



956,047Total operating expenses


1,596,163



1,918,622



1,682,143Loss from operations


(132,019
)


(347,648
)


(200,123
)Other non-operating income (expense):Interest income


1,351



6,267



9,492Interest expense


(10,301
)


(6,709
)


(5,179
)Gain (loss) on investments


3,556



(7,770
)


Other income (expense)


5,773



(20,066
)


(5,792
)Total other non-operating income (expense)


379



(28,278
)


(1,479
)Gain on the sale and development of real estate and equity
    interests


21,651



17,374



105,081Sunrises share of earnings (loss) and return on investmentin unconsolidated communities


5,673



(13,846
)


107,347(Loss) income from investments accounted for under the
    profit-sharing method


(12,808
)


(1,329
)


22(Loss) income before benefit from (provision for) incometaxes and discontinued operations


(117,124
)


(373,727
)


10,848Benefit from (provision for) income taxes


3,880



47,137



(13,323
)Loss before discontinued operations


(113,244
)


(326,590
)


(2,475
)Discontinued operations, net of tax


(20,271
)


(117,516
)


(70,512
)Net loss


(133,515
)


(444,106
)


(72,987
)Less: (Income) loss attributable to noncontrolling interests,
    net of tax


(400
)


4,927



2,712Net loss attributable to common shareholders

$
(133,915
)

$
(439,179
)

$
(70,275
)Earnings per share data:Basic net loss per common shareLoss before discontinued operations

$
(2.22
)

$
(6.48
)

$
(0.05
)Discontinued operations, net of tax


(0.39
)


(2.24
)


(1.36
)Net loss

$
(2.61
)

$
(8.72
)

$
(1.41
)Diluted net loss per common shareLoss before discontinued operations

$
(2.22
)

$
(6.48
)

$
(0.05
)Discontinued operations, net of tax


(0.39
)


(2.24
)


(1.36
)Net loss

$
(2.61
)

$
(8.72
)

$
(1.41
)    69




---



##### 



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


EquityShares of


Common


Additional





Other


AttributableCommon


Stock


Paid-in


Retained


Comprehensive


to Noncontrolling(In thousands)

Stock


Amount


Capital


Earnings/(Loss)


Income (Loss)


InterestsBalance at January 1, 2007


50,572


$
506


$
445,275


$
182,398


$
2,529


$
16,515Net loss














(70,275
)






(4,470
)Foreign currency translation income, net of tax


















5,865



Sunrises share of investees other comprehensive loss


















(100
)


Distributions to noncontrolling interests






















(5,825
)Investment in noncontrolling interests






















3,210Deconsolidation of noncontrolling interests






















778Issuance of restricted stock


88



1















Forfeiture or surrender of restricted stock


(103
)


(1
)


(1,818
)










Stock-based compensation expense










7,020











Tax effect from stock-based compensation










2,163











Balance at December 31, 2007


50,557



506



452,640



112,123



8,294



10,208Net loss














(439,179
)






(8,154
)Foreign currency translation income, net of tax


















5,583



Sunrises share of investees other comprehensive loss


















(7,206
)


Distributions to noncontrolling interests






















(1,343
)Investment in noncontrolling interests






















8,675Issuance of restricted stock


165







(2
)










Forfeiture or surrender of restricted or common stock


(211
)


(1
)


(1,025
)










Stock option exercises


361



4



4,162











Stock-based compensation expense










4,202











Tax effect from stock-based compensation










(1,573
)










Balance at December 31, 2008


50,872



509



458,404



(327,056
)


6,671



9,386Net (loss) income














(133,915
)






662Foreign currency translation loss, net of tax


















(4,813
)


Sunrises share of investees other comprehensive
    income


















6,324



Distributions to noncontrolling interests










(142
)










(1,341
)Sale of Greystone






















(6,633
)Consolidation of a controlled entity


















120



2,113Issuance of common stock


4,175



42



11,064











Forfeiture or surrender of restricted or common stock


(59
)


(1
)


(116
)










Stock option exercises


764



8



1,020











Stock-based compensation expense










3,928











Balance at December 31, 2009


55,752


$
558


$
474,158


$
(460,971
)

$
8,302


$
4,187    70




---



##### 



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

2009


2008


2007Operating activitiesNet loss

$
(133,515
)

$
(444,106
)

$
(72,987
)Less: Net loss from discontinued operations


20,271



117,516



70,512Adjustments to reconcile net loss to net cash provided by (used
    in) operating activities:Gain on the sale and development of real estate and equity
    interests


(21,651
)


(17,374
)


(105,081
)Loss (income) from investments accounted for under the
    profit-sharing method


12,808



1,329



(22
)(Gain) loss on investments


(3,556
)


7,770



Impairment of long-lived assets, goodwill and intangibles


31,685



149,644



7,641Write-off of capitalized project costs


14,879



95,763



28,430Provision for doubtful accounts


13,625



20,077



7,709Benefit from deferred income taxes


(2,790
)


(46,250
)


(8,854
)Loss on financial guarantees and other contracts


2,053



5,022



22,005Sunrises share of (earnings) loss and return on investment
    in unconsolidated communities


(5,673
)


13,846



(107,347
)Distributions of earnings from unconsolidated communities


18,998



32,736



166,722Depreciation and amortization


46,629



39,497



42,601Amortization of financing costs and debt discount


1,261



575



1,051Stock-based compensation


3,812



3,176



7,020Changes in operating assets and liabilities:(Increase) decrease in:Accounts receivable


13,268



12,599



(10,365
)Due from unconsolidated senior living communities


23,997



(18,873
)


24,237Prepaid expenses and other current assets


11,868



40,014



(60,387
)Captive insurance restricted cash


(722
)


2,728



(32,930
)Other assets


23,922



32,962



(35,589
)Increase (decrease) in:Accounts payable, accrued expenses and other liabilities


(35,608
)


(88,004
)


114,977Entrance fees


(2,113
)


758



(3,586
)Self-insurance liabilities


(3,714
)


(22,935
)


12,866Guarantee liabilities


(125
)


(21,625
)


(5,829
)Deferred revenue and gains on the sale of real estate


1,703



(850
)


1,613Net cash provided by (used in) discontinued operations


2,107



(39,929
)


64,079Net cash provided by (used in) operating activities


33,419



(123,934
)


128,486Investing activitiesCapital expenditures


(19,950
)


(173,545
)


(237,556
)Acquisitions of business assets










(49,917
)Net funding for condominium projects


(4,963
)


(57,935
)


Dispositions of property


10,758



62,853



60,387Change in restricted cash


(14,549
)


56,661



(23,202
)Purchases of short-term investments






(102,800
)


(448,900
)Proceeds from short-term investments


15,950



63,950



448,900Increase in investments and notes receivable


(89,473
)


(205,344
)


(183,314
)Proceeds from investments and notes receivable


94,968



223,424



220,312Investments in unconsolidated communities


(6,902
)


(22,929
)


(29,297
)Distributions of capital from unconsolidated communities










601Consolidation of German venture






25,557



Net cash provided by (used in) discontinued operations


98,534



(42,345
)


(6,557
)Net cash provided by (used in) investing activities


84,373



(172,453
)


(248,543
)Financing activitiesNet proceeds from exercised options


1,028



4,162



Additional borrowings of long-term debt


4,969



101,952



129,231Repayment of long-term debt


(13,561
)


(17,131
)


(10,515
)Net (repayments) borrowings on Bank Credit Facility


(61,272
)


(5,000
)


50,000Distributions to minority interests


(1,341
)


(1,344
)


(1,180
)Financing costs paid


(590
)


(2,467
)


Net cash (used in) provided by discontinued operations


(37,255
)


107,516



8,743Net cash (used in) provided by financing activities


(108,022
)


187,688



176,279Net increase (decrease) in cash and cash equivalents


9,770



(108,699
)


56,222Cash and cash equivalents at beginning of period


29,513



138,212



81,990Cash and cash equivalents at end of period

$
39,283


$
29,513


$
138,212    71




---



##### 



Sunrise
    Senior Living, Inc.
  Notes
    to Consolidated Financial Statements
  1.
    Organization
    and Presentation  Organization
      Basis
    of Presentation
        2.
    Significant
    Accounting Policies   72




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Cash
    and Cash Equivalents
    Restricted
    Cash
    Allowance
    for Doubtful Accounts
    Due
    from Unconsolidated Communities
    Property
    and Equipment
       73




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Assets
    Held for Sale
    
    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.    Real
    Estate Sales
       74




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Capitalization
    of Interest Related to Development Projects
    Intangible
    Assets
      Investments
    in Unconsolidated Communities
     75




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    ,
  and/or
        Deferred
    Financing Costs
    Loss
    Reserves For Certain Self-Insured Programs
   76




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          Employee
    Health and Dental Benefits
    Continuing
    Care Agreements
   77




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Accounting
    for Guarantees
    Asset
    Retirement Obligations
        Income
    Taxes
   78




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Revenue
    Recognition
        percentage-of-completion cost-to-cost
    ,
  Stock-Based
    Compensation
    Foreign
    Currency Translation
  ,
 79




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Advertising
    Costs
    Legal
    Contingencies
    Reclassifications
    New
    Accounting Standards
         80




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        other-than-temporary
          2009-05, Fair Value Measurements and Disclosures (Topic
    820)  Measuring Liabilities at Fair Value 2009-05). 2009-05 2009-05 2009-05
  Future
    Adoption of Accounting Standards
  2009-17, Consolidations (Topic 810) Improvements to Financial
    Reporting by Enterprises Involved with Variable Interest
    Entities 2009-17 2009-17 2009-17 2009-17
 81




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  2009-13, Revenue Recognition (Topic 605) 
    Multiple-Deliverable Revenue Arrangements 2009-13). 605-25. 2009-13 2009-13
  3.
    Fair
    Value Measurements          Auction
    Rate Securities, Marketable Securities and Interest Rate
    Caps
    Fair Value Measurements at Reporting Date UsingQuoted Prices in


Significant Other


SignificantActive Markets for


Observable


UnobservableDecember 31,


Identical Assets


Inputs


InputsAsset

2009


(Level 1)


(Level 2)


(Level 3)Auction rate securities

$
18,686


$



$



$
18,686Marketable securities


2,311



2,311







$
20,997


$
2,311


$



$
18,686      82




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        AuctionRate SecuritiesBeginning balance  1/1/09

$
31,080Total gains


3,556Sales


(7,200
)Redemptions


(8,750
)Ending balance  12/31/09

$
18,686     German
    Assets Held for Sale, Assets Held for Sale and Assets Held and
    Used
  German
    Assets Held for Sale
    December 31,2009Cash and cash equivalents

$
542Accounts receivable, net


3,112Property and equipment, net


100,937Prepaid and other assets


129German assets held for sale

$
104,720Accounts payable and accrued expenses

$
12,632   Assets
    Held for Sale
    December 31,


December 31,2009


2008Land

$
33,801


$
46,018Closed community


2,514



Condominium units


4,343



3,058Assets held for sale

$
40,658


$
49,076  83




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Assets
    Held and Used
      Fair
    Value Measurements of German Assets Held for Sale, Assets Held
    for Sale and Assets Held and Used
    Fair Value Measurements at Reporting Date UsingQuoted Prices in


Significant Other


SignificantActive Markets for


Observable


Unobservable


TotalDecember 31,


Identical Assets


Inputs


Inputs


ImpairmentAsset

2009


(Level 1)


(Level 2)


(Level 3)


LossesGerman assets held for sale

$
83,309


$



$



$
83,309


$
(49,885
)Other assets held for sale


33,000











33,000



(4,462
)Assets held and used


29,587











29,587



(49,862
)$
145,896


$



$



$
145,896


$
(104,209
)   Other
    Fair Value Information
     84




---



##### 



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


Variable RateDebt


DebtTotal Carrying Value

$
1,365


$
438,854Average Interest Rate


6.67
%


2.85
%Estimated Fair Market Value

$
1,365


$
375,614     4.
    Allowance
    for Doubtful Accounts    Accounts


OtherReceivable


Assets


TotalBalance January 1, 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



43,033Provision for doubtful accounts(1)


14,931







14,931Write-offs


(25,900
)


(8,000
)


(33,900
)Balance December 31, 2009(1)

$
24,064


$



$
24,064     (1)
    
    Includes provision associated with discontinued operations.  5.
    Property
    and Equipment    December 31,Asset Lives

2009


2008Land and land improvements

15 years

$
75,595


$
130,806Building and building improvements

40 years


217,764



473,732Furniture and equipment

3-10 years


140,024



179,635433,383



784,173Less: Accumulated depreciation




(146,638
)


(191,718
)286,745



592,455Capitalized project costs




1,311



88,897Property and equipment, net



$
288,056


$
681,352  85




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        6.
    Sales of
    Real Estate    December 31,2009


2008


2007Properties accounted for under basis of performance of services

$
10.5


$
9.6


$
3.6Properties accounted for previously under financing method






0.5



32.8Properties accounted for previously under deposit method


3.4



0.9



52.4Properties accounted for under the profit-sharing method


8.9



6.7



Land and community sales


(0.4
)


(0.9
)


5.7Condominium sales


(1.0
)


1.0



Sales of equity interests and other sales


0.3



(0.4
)


10.6Total gains on the sale and development of real estate and
    equity interests

$
21.7


$
17.4


$
105.1   Basis
    of Performance of Services
     86




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Financing
    Method
    Deposit
    Method
      December 31,2007Properties subject to sales contract, net

$
Deposits related to properties


subject to a sales contract


Depreciation expense


4,876Development fees received, net of costs


Management fees received


2,331   Installment
    Method
    Investments
    Accounted for Under the Profit-Sharing Method,
    net
   87




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          Year Ended December 31,2009


2008


2007Revenue

$
14,219


$
16,635


$
23,791Operating expenses


(18,849
)


(11,459
)


(15,301
)Interest expense


(6,195
)


(597
)


(2,149
)Impairment loss


(1,146
)






(Loss) income from operations before depreciation


(11,971
)


4,579



6,341Depreciation expense


1,489







Distributions to other investors


(2,326
)


(5,908
)


(6,319
)(Loss) income from investments accounted forunder the profit-sharing method

$
(12,808
)

$
(1,329
)

$
22Investments accounted for under theprofit-sharing method, net

$
11,031


$
13,673


$
(51,377
)Amortization expense on investmentsaccounted for under the profit-sharing method

$
363


$
987


$
1,800   Land
    and Community Sales
     88




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Condominium
    Sales
    Sales
    of Equity Interests
  ,
  7.
    Variable
    Interest Entities    VIEs
    where Sunrise is the Primary Beneficiary
  not-for-profit
 89




---



##### 



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
      8.
    Intangible
    Assets and Goodwill    Estimated


December 31,Useful Life


2009


2008Management contracts less accumulated amortization of $33,007
    and $32,433


1-30 years


$
48,464


$
65,532Leaseholds less accumulated amortization of $4,407 and $3,992


10-29 years



3,477



3,892Other intangibles less accumulated amoritization of $898 and $763


1-40 years



1,083



1,218$
53,024


$
70,642  90




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
       91




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   9.
    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
%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
%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 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 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 6.   92




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    December 31,2009

2008

2007Assets, principally property and equipment

$
3,989,387


$
4,704,052


$
5,183,922Long-term debt


3,569,246



3,933,188



4,075,993Liabilities excluding long-term debt


226,678



378,988



549,628Equity


193,463



391,876



558,301Revenue


854,552



1,120,877



1,021,112Net loss


(25,084
)


(94,327
)


(15,487
)         December 31,2009


2008


2007Sunrises share of earnings (loss) in unconsolidated
    communities

$
3,708


$
(31,133
)

$
60,700Return on investment in unconsolidated communities


10,612



33,483



71,110Impairment of equity investments


(8,647
)


(16,196
)


(24,463
)Sunrises share of earning (losses) and return on
    investment in unconsolidated communities

$
5,673


$
(13,846
)

$
107,347     Return
    on Investment in Unconsolidated Communities
         93




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Transactions
           94




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Aston
    Gardens
      Fountains
    Venture
       95




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    
    Transferred our 20-percent ownership interest in the Fountains
    joint venture to our joint venture partner;
    Contributed vacant land parcels adjacent to six of the Fountains
    communities and owned by us to the Fountains venture;
    Agreed to transfer management of the 16 Fountains communities as
    soon as the transition closing conditions are met and the new
    manager has obtained the regulatory approvals necessary to
    assume control of the facilities; and
    Repaid the venture the management fee we had earned to date in
    2009 of $1.8 million.      10.
    Debt and
    Bank Credit Facility  Debt
    December 31,


December 31,2009


2008Community mortgages

$
112,660


$
241,851German communities(1)


198,680



185,901Bank Credit Facility


33,728



95,000Land loans


33,327



37,407Other


25,557



30,655Variable interest entity


23,225



23,905Margin loan (auction rate securities)


13,042



21,412$
440,219


$
636,131     (1)
    
    The face amount of the debt related to the German communities
    was $215.2 million at December 31, 2009. Excludes
    $10.5 million of accrued interest on the German debt as of
    December 31, 2009 which is reflected in Liabilities
    associated with German assets held for sale on our consolidated
    balance sheet.   96




---



##### 



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





Variable


GermanyBank Credit


Wholly-Owned


Land


Interest


VentureFacility


Properties


Loans


Entity Debt


Debt(1)


Other


TotalPast due

$



$
1,398


$
27,107


$
1,365


$
1,723


$



$
31,5932010


33,728



76,278



6,220



715



71,655



38,599



227,1952011






34,984







740



95,590







131,3142012














775



29,712







30,4872013














810











8102014














840











840Thereafter














17,980











17,980$
33,728


$
112,660


$
33,327


$
23,225


$
198,680


$
38,599


$
440,219     December 31,2009German communities

$
198,680Community mortgages


36,382Variable interest entity


23,225Land loans


33,327Other


25,557$
317,171       1st Qtr.


2nd Qtr.


3rd Qtr.


4th Qtr.2010


2010


2010


2010


Thereafter


TotalBank Credit Facility

$



$



$



$
33,728


$



$
33,728Community mortgages






41,773







34,505







76,278Margin loan (auction rate securities)














13,042







13,042$



$
41,773


$



$
81,275


$



$
123,048   Germany
    Venture
   97




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
             98




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Mortgage
    Financing
        Bank
    Credit Facility
    
    extended the maturity date to December 2, 2010;
    removed all existing financial covenants other than the minimum
    liquidity covenant;
    renewed existing letters of credit;
    modified the minimum liquidity covenant to not less than
    $10.0 million of unrestricted cash on hand the last day of
    the month;
    modified the restriction on the disposal of assets to include
    disposition of certain assets as long as 50% of the net sale
    proceeds are allocated to the lenders; and
    permanently reduced the commitment after future principal
    repayments or cancellation of letters of credit.   99




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Other
      Value
    of Collateral and Interest Paid
     100




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   11.
    Income
    Taxes    December 31,2009


2008Deferred tax assets:Sunrise operating loss carryforwards  federal

$
93,591


$
54,006Sunrise operating loss carryforwards  state


23,474



25,827Sunrise operating loss carryforwards  foreign


14,684



19,657Financial guarantees


28,490



30,226Accrued health insurance


10,186



8,203Self-insurance liabilities


9,027



8,123Stock-based compensation


5,153



6,672Deferred development fees


6,638



35,085Allowance for doubtful accounts


5,236



9,007Tax credits


2,812



7,562Accrued expenses and reserves


38,838



28,442Basis difference in property and equipment and intangibles


25,470



Entrance fees


16,604



15,939Other


4,176



3,034Gross deferred tax assets


284,379



251,783U.S. federal and state valuation allowance


(128,441
)


(110,297
)German valuation allowance


(26,649
)


(19,322
)Canadian valuation allowance


(10,994
)


(8,332
)U.K. valuation allowance


(1,114
)


(889
)Net deferred tax assets


117,181



112,943Deferred tax liabilities:Investments in ventures


(114,058
)


(105,573
)Basis difference in property and equipment and intangibles






(1,264
)Prepaid expenses






(2,519
)Other


(3,123
)


(6,375
)Total deferred tax liabilities


(117,181
)


(115,731
)Net deferred tax liabilities

$



$
(2,788
)    101




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Years Ended December 31,2009


2008


2007Current:Federal

$
(952
)

$
(679
)

$
18,934State


799



3,019



2,903Foreign


(1,201
)






2,098Total current expense


(1,354
)


2,340



23,935Deferred:Federal


(5,350
)


(49,555
)


(12,927
)State


2,824



1,240



1,089Foreign






(1,162
)


1,226Total deferred benefit


(2,526
)


(49,477
)


(10,612
)(Benefit from) provision for income taxes

$
(3,880
)

$
(47,137
)

$
13,323    102




---



##### 



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

2009


2008


2007(Loss) income before tax benefit (expense) taxed in the
    U.S.

$
(105,637
)

$
(341,339
)

$
2,673(Loss) income before tax benefit (expense) taxed in foreign
    jurisdictions


(11,487
)


(32,388
)


8,175(Loss) income from continuing operations before tax benefit
    (expense)

$
(117,124
)

$
(373,727
)

$
10,848Tax at US federal statutory rate


(35.0
)%


(35.0
)%


35.0
%State taxes, net


2.7
%


(5.8
)%


4.3
%Work opportunity credits


0.0
%


(0.3
)%


(4.2
%)Change in valuation allowance


40.4
%


34.7
%


28.8
%Tax exempt interest


(0.2
)%


(0.3
)%


(16.2
)%Tax contingencies


(1.7
)%


0.4
%


17.0
%Write-off of non-deductible goodwill


(8.5
)%


4.2
%


0.0
%Foreign rate differential


0.2
%


1.0
%


(3.1
)%Unremitted foreign earnings


0.3
%


(0.5
)%


31.9
%Transfer pricing


1.9
%


0.6
%


24.9
%Income tax refunds received


(4.3
)%


0.0
%


0.0
%Other


0.9
%


(11.6
)%


4.4
%(3.3
)%


(12.6
)%


122.8
%   (In thousands)

2009


2008


2007Gross unrecognized tax benefit at beginning of year

$
17,817


$
31,343


$
30,158Additions based on tax positions taken during a prior period


1,439







Reductions based on tax positions taken during a prior period


(3,897
)


(14,196
)


Additions based on tax positions taken during the current period






670



1,545Reductions based on tax positions taken during the current period










Reductions related to settlement of tax matters










Reductions related to a lapse of applicable statute of
    limitations










(360
)Gross unrecognized tax benefit at end of year

$
15,359


$
17,817


$
31,343      103




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      2003-2005
  12.
    Stockholders
    Equity  Issuance
    of Common Stock
    Stock
    Options
       104




---



##### 



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

2008

2007Risk free interest rate

3.0% - 3.7%

0.4% - 3.8%

3.6%Expected dividend yield





Expected term (years)

6.5

0.1 - 8.1

1.0Expected volatility

81.8% - 92.0%

27.8% - 79.3%

25.5%     Weighted


RemainingAverage


ContractualShares


Exercise Price


TermOutstanding  beginning of year


7,807


$
6.72Granted


890



2.58Exercised


(763
)


1.37Forfeited


(397
)


1.25Expired


(865
)


15.67Outstanding  end of year


6,672



6.45



6.9Vested and expected to vest  end of year


5,458



6.45



6.9Exercisable  end of year


3,300



10.46



4.8              105




---



##### 



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


Fair ValueNonvested, January 1, 2007


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



24.91Granted






Vested


(138
)


28.77Canceled


(43
)


32.38Nonvested, December 31, 2009


143



19.05       Stockholder
    Rights Agreement
   106




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
           107




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   13.
    Net Loss
    Per Common Share    Years Ended December 31,2009


2008


2007Numerator for basic and diluted loss per share:Loss from continuing operations

$
(113,830
)

$
(326,425
)

$
(2,412
)Loss from discontinued operations


(20,085
)


(112,754
)


(67,863
)Net loss

$
(133,915
)

$
(439,179
)

$
(70,275
)Denominator:Denominator for basic net (loss) income per common
    share  weighted average shares


51,391



50,345



49,851Basic and diluted net loss per common shareLoss from continuing operations

$
(2.22
)

$
(6.48
)

$
(0.05
)Loss from discontinued operations


(0.39
)


(2.24
)


(1.36
)Total net loss

$
(2.61
)

$
(8.72
)

$
(1.41
)     14.
    Commitments
    and Contingencies  Leases
    for Office Space
    Trinity
    Leases
     108




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Leases
    for Operating Communities
  and/or
      2010

$
59,5692011


56,5462012


56,2282013


52,9132014


21,746Thereafter


147,520$
394,522   Letters
    of Credit
    Guarantees
   109




---



##### 



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


ASCGuarantee


ContingenciesTopic


Topic


Total


Fundings fromLiability


Liability


Liability


January 1,Maximum


for Future


for Future


for Future


2009Potential Amount


Fundings at


Fundings at


Fundings at


throughof Future


December 31,


December 31,


December 31,


December 31,Guarantee Type

Fundings


2009


2009


2009


2009Operating deficit


Uncapped


$
323


$
500


$
823


$
Other


















125Total





$
323


$
500


$
823


$
125   Senior
    Living Condominium Project
      Agreements
    with Marriott International, Inc.
    Other
     110




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Employment
    Agreements
      gross-up
    Legal
    Proceedings
  HCP
    Trinity
    OIG Investigation and Qui
    Tam Action
   111




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  qui tam
  IRS
    Audit
      SEC
    Investigation
    Putative
    Class Action Litigation
     112




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Putative
    Shareholder Derivative Litigation
       113




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Other
    Pending Lawsuits and Claims
    15.
    Related-Party
    Transactions  Sunrise
    Senior Living Real Estate Investment Trust
    30-year
  lease-up
   114




---



##### 



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
  not-for-profit and/or son-in-law
  12-month
 115




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Fairfax
    Community Ground Lease
  99-year
  Consulting
    Agreement
    Corporate
    Use of Residence
  99-year 99-year
  Purchase
    of Condominium Unit
    Service
    Evaluators Incorporated
  brother-in-law sister-in-law
 116




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  on-site on-site on-site
  Greystone
    Earnout Payments
    Purchase
    of Aircraft Interest by Mr. Klaassen
    SecureNet
    Payment Systems LLC
    16.
    Employee
    Benefit Plans  401k
    Plan
   117




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Sunrise
    Executive Deferred Compensation Plans
    Chief
    Executive Officer Deferred Compensation Plan
  12-year
  17.
    Discontinued
    Operations      For the Years Ended December 31,(In thousands)

2009


2008


2007Revenue

$
107,644


$
170,430


$
170,530Expenses


(113,644
)


(231,834
)


(208,884
)Impairments


(72,524
)


(18,748
)


(56,729
)Other (expense) income


(15,871
)


(15,900
)


231Gain on sale of real estate or business


74,124



1,094



Income taxes






(427
)


24,340Extraordinary loss, net of tax






(22,131
)


Loss from discontinued operations

$
(20,271
)

$
(117,516
)

$
(70,512
)     18.
    Information
    about Sunrises Segments   118




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    North American Management
  North American Development
  Equity Method Investments
  Consolidated (Wholly Owned/Leased)
  United Kingdom
  Germany
     119




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    For the Year Ended December 31, 2009Consolidated





UnallocatedNorth

North

Equity

(Wholly



Germany

CorporateAmerican

American

Method

Owned/

United

Management

andManagement

Development

Investments

Leased)

Kingdom

Company

Eliminations

TotalRevenues

$
1,105,974


$
6,637


$
2,151


$
350,165


$
27,597


$
1,717


$
(30,097
)

$
1,464,144Community expense


2,170



214



42



287,719







158



(21,984
)


268,319Development expense


25



9,347



606



312



1,682



128



401



12,501Depreciation and amortization


11,925



1,927







17,550



382



114



14,731



46,629Other operating expenses


1,058,795



25,285



6,306



61,198



25,009



4,672



55,764



1,237,029Impairment of owned communities, land parcels, goodwill and
    intangibles






28,897







2,953











(165
)


31,685Income (loss) from operations


33,059



(59,033
)


(4,803
)


(19,567
)


524



(3,355
)


(78,844
)


(132,019
)Interest income


413



869



7



225



(10
)


11



(164
)


1,351Interest expense


(169
)


(926
)






(4,866
)






(29
)


(4,311
)


(10,301
)Foreign exchange gain/(loss)














7,989



(632
)


(645
)






6,712Sunrises share of earnings (losses) and return on
    investment in unconsolidated communities










5,872















(199
)


5,673Income (loss) before income taxes, discontinued operations, and
    noncontrolling interests


37,080



(53,678
)


1,076



(16,707
)


(913
)


(4,146
)


(79,836
)


(117,124
)Investments in unconsolidated communities










64,971



















64,971Segment assets


141,389



71,061



71,124



295,062



13,862



105,763



212,328



910,589Expenditures for long-lived assets






9,794







10,111



45











19,950Deferred gains on the sale of real estate and deferred revenue






16,865



















5,000



21,865   120




---



##### 



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





UnallocatedNorth

North

Equity

(Wholly



Germany

CorporateAmerican

American

Method

Owned/

United

Management

andManagement

Development

Investments

Leased)

Kingdom

Company

Eliminations

TotalRevenues

$
1,189,971


$
27,425


$
2,303


$
340,834


$
32,803


$
11,104


$
(33,466
)

$
1,570,974Community expense


(535
)


774



122



282,051







60



(24,917
)


257,555Development expense


5,065



21,405



3,121



15



4,335



16



177



34,134Depreciation and amortization


6,969



1,132



88



15,491



331



114



15,372



39,497Other operating expenses


1,130,122



113,672



19,556



60,480



22,749



15,322



75,891



1,437,792Impairment of owned communities, land parcels, goodwill and
    intangibles


121,553



5,870



6,350



15,871















149,644Income (loss) from operations


(73,203
)


(115,428
)


(26,934
)


(33,074
)


5,388



(4,408
)


(99,989
)


(347,648
)Interest income


825



425



836



289



621



265



3,006



6,267Interest expense


(287
)


(1,260
)


(366
)


(4,471
)






(94
)


(231
)


(6,709
)Foreign exchange gain/(loss)






(9,796
)






(4,399
)


(3,075
)


2,620







(14,650
)Sunrises share of losses and return on investment in
    unconsolidated communities










(13,816
)














(30
)


(13,846
)Income (loss) before income taxes, discontinued operations, and
    noncontrolling interests


(72,282
)


(112,091
)


(39,996
)


(40,670
)


2,936



(2,218
)


(109,406
)


(373,727
)Investments in unconsolidated communities










66,852



















66,852Goodwill


























39,025



39,025Segment assets


192,079



184,786



80,836



422,980



21,929



152,094



326,853



1,381,557Expenditures for long-lived assets






137,449







16,723



19,270



103







173,545Deferred gains on the sale of real estate and deferred revenue






26,291



















62,415



88,706   For the Year Ended and as of December 31, 2007NorthAmerica

International

Germany

TotalRevenues

$
1,431,983


$
39,710


$
10,327


$
1,482,020Interest income


8,329



1,014



149



9,492Interest expense


4,056



1,118



5



5,179Foreign exchange (loss) gain






3,966



(6,280
)


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


31,812



75,535







107,347Depreciation and amortization


41,715



750



136



42,601(Loss) income from continuing operations


(33,718
)


54,847



(23,604
)


(2,475
)Investments in unconsolidated communities


80,423



16,750







97,173Goodwill


169,736











169,736Segment assets


1,551,098



213,538



33,961



1,798,597Expenditures for long-lived assets


188,509



48,908



139



237,556Deferred gains on the sale of real estate and deferred revenue


74,367











74,367    121




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
               122




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   19.
    Accounts
    Payable and Accrued Expenses    December 31,2009


2008Accounts payable and accrued expenses

$
40,034


$
66,760Accrued salaries and bonuses


24,738



30,123Accrued employee health and other benefits


41,340



47,685Accrued legal, audit and professional fees


3,999



8,933Other accrued expenses


27,921



30,643$
138,032


$
184,144   20.
    Severance
    and Restructuring Plan             123




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  1 24
    
    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.      Liability at








Cash Payments


Liability atJanuary 1,


Additional





and Other


December 31,(In thousands)

2009


Charges


Adjustments


Settlements


2009Voluntary severance

$
3,312


$
1,067


$
(253
)

$
(4,126
)

$
Involuntary severance


1,518



10,956



(367
)


(10,154
)


1,953CEO retirement compensation


1,523



55







(500
)


1,078Professional fees






18,647







(18,647
)


Lease termination costs


2,394



3,208



591



(2,637
)


3,556$
8,747


$
33,933


$
(29
)

$
(36,064
)

$
6,587    124




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   21.
    Comprehensive
    Loss    2009


2008


2007Net loss attributable to common shareholders

$
(133,915
)

$
(439,179
)

$
(70,275
)Foreign currency translation adjustment


(4,813
)


5,583



5,865Equity interest in investees other comprehensive income
    (loss)


6,324



(7,206
)


(100
)Unrealized gain on investments


120







Comprehensive loss


(132,284
)


(440,802
)


(64,510
)Comprehensive loss attributable to noncontrolling interest -Unrealized gain on investments


(120
)






Comprehensive loss attributable to common shareholders

$
(132,404
)

$
(440,802
)

$
(64,510
)   22.
    Quarterly
    Results of Operations (Unaudited)    Q1

Q2

Q3

Q4(2)

Total2009Operating revenue

$
376,054


$
360,965


$
362,790


$
364,335


$
1,464,144Loss from continuing operations


(28,207
)


(19,164
)


(36,220
)


(30,239
)


(113,830
)Income (loss) from discontinued operations


10,046



(62,624
)


(8,182
)


40,675



(20,085
)Net (loss) income


(18,161
)


(81,788
)


(44,402
)


10,436



(133,915
)Basic net (loss) income per common share(1)Continuing operations

$
(0.56
)

$
(0.38
)

$
(0.72
)

$
(0.57
)

$
(2.22
)Discontinued operations


0.20



(1.24
)


(0.16
)


0.76



(0.39
)Net (loss) income


(0.36
)


(1.62
)


(0.88
)


0.19



(2.61
)Diluted net (loss) income per common share(1)Continuing operations

$
(0.56
)

$
(0.38
)

$
(0.72
)

$
(0.57
)

$
(2.22
)Discontinued operations


0.20



(1.24
)


(0.16
)


0.76



(0.39
)Net (loss) income


(0.36
)


(1.62
)


(0.88
)


0.19



(2.61
)2008Operating revenue

$
389,388


$
390,981


$
392,186


$
398,419


$
1,570,974Loss from continuing operations


(25,192
)


(20,524
)


(40,956
)


(234,991
)


(321,663
)Loss from discontinued operations


(7,933
)


(11,252
)


(27,710
)


(70,621
)


(117,516
)Net loss


(33,125
)


(31,776
)


(68,666
)


(305,612
)


(439,179
)Basic and diluted net loss per common share(1)Continuing operations

$
(0.52
)

$
(0.43
)

$
(0.84
)

$
(4.69
)

$
(6.48
)Discontinued operations


(0.14
)


(0.20
)


(0.52
)


(1.38
)


(2.24
)Net loss


(0.66
)


(0.63
)


(1.36
)


(6.07
)


(8.72
)  125




---



##### 



Sunrise
    Senior Living, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    (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 2009, we sold 21 properties and
    recognized a gain of $48.9 million which is included in
    discontinued operations. 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.  23.
    Subsequent
    Events         126




---



##### 



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
  Managements
    Report on Internal Control Over Financial Reporting
            Changes in Internal Control over Financial Reporting
   127




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                  
    128




---



##### 



Item 9B.
    Other
    Information.   129




---



##### 



PART III Item 10.
    Directors,
    Executive Officers and Corporate Governance    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Shareholder Matters    Item 13.
    Certain
    Relationships and Related Transactions and Director
    Independence    Item 14.
    Principal
    Accounting Fees and Services   130




---



##### 



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  a.
    (1) All financial statements  Form 10-K.
  (2)
    Financial statement schedules       131




---



##### 



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

PRINCIPAL FINANCIAL OFFICERBy:

/s/ Mark S. Ordan

By:

/s/ Julie A. PangelinanMark S. Ordan, Director and



Julie A. Pangelinan, Chief Financial OfficerChief Executive OfficerPRINCIPAL ACCOUNTING OFFICERBy:

/s/ C. Marc RichardsC. Marc RichardsChief 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  132




---



##### 



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
.82
.9

Purchase and Sale Agreement, dated as of October 7, 2009,
    by and among various subsidiaries of Sunrise Senior Living, Inc.
    and BLC Acquisitions, Inc.

10-Q

November 9, 2009


2
.12
.10

First Amendment to Purchase and Sale Agreement, dated as of
    October 7, 2009, by and among various subsidiaries of
    Sunrise Senior Living, Inc. and BLC Acquisitions, Inc.

10-Q

November 9, 2009


2
.2 133




---



##### 



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number2
.11

Second Amendment to Purchase and Sale Agreement, dated as of
    October 7, 2009, by and among various subsidiaries of
    Sunrise Senior Living, Inc. and BLC Acquisitions, Inc.

10-Q

November 9, 2009


2
.33
.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
.14
.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

First Amendment to the Rights Agreement, dated as of
    November 19, 2008, between Sunrise Senior Living, Inc. and
    American Stock Transfer & Trust Company, as
    rights agent.

8-K

November 19, 2008


4
.14
.4

Second Amendment to the Rights Agreement, dated as of
    January 27, 2010, between Sunrise Senior Living, Inc. and
    American Stock Transfer & Trust Company, as
    rights agent.

8-K

January 27, 2010


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.+*

10-K

March 2, 2009


10
.1710
.18

Form of Incentive Stock Option Agreement.+*

10-K

March 2, 2009


10
.1810
.19

Form of Restricted Stock Agreement.+*

10-K

March 2, 2009


10
.1910
.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


B 134




---



##### 



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number10
.23

Sunrise Executive Deferred Compensation Plan, effective
    January 1, 2009.+

10-K/A

March 31, 2009


10
.2310
.24

Greystone Communities Nonqualified Deferred Compensation Plan.+

10-K

July 31, 2008


10
.2510
.25

Bonus Deferral Programs for Certain Executive Officers.+

8-K

March 14, 2006


10
.210
.26

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

10-Q

November 13, 2002


10
.110
.27

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

10-K

March 16, 2005


10
.3210
.28

Amendment 2 to the Sunrise Assisted Living, Inc. Long Term
    Incentive Cash Bonus Plan.+

10-K/A

March 31, 2009


10
.2810
.29

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

10-K

March 16, 2006


10
.5310
.30

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

10-K/A

March 31, 2009


10
.3010
.31

Form of Indemnification Agreement.+

10-K

March 16, 2006


10
.5410
.32

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
.33

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

10-K

March 24, 2008


10
.3010
.34

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

10-K

March 24, 2008


10
.6510
.35

Consulting Arrangement with Paul J. Klaassen. +

10-Q

November 9, 2009


10
.2910
.36

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
.37

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

8-K

November 19, 2008


10
.110
.38

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

8-K

November 19, 2008


10
.210
.39

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

8-K

December 15, 2008


10
.110
.40

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

8-K

January 21, 2009


10
.210
.41

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

8-K

January 21, 2009


10
.310
.42

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

8-K

January 21, 2009


10
.410
.43

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

8-K

February 26, 2009


10
.110
.44

Separation Agreement between the Company and Richard J. Nadeau,
    dated May 29, 2009. +

8-K

June 4, 2009


10
.110
.45

2008 Non-Employee Director Fees and Other Compensation.+

10-K

March 2, 2009


10
.4510
.46

2009 Annual Bonus Performance Metrics Applicable to Executive
    Officers.+

10-Q

November 9, 2009


10
.2810
.47

2009 Special Bonus Payments to Executive Officers. +

10-Q

November 9, 2009


10
.30 135




---



##### 



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number10
.48

2009 Partial Bonus Payments to Executive Officers. +

10-Q

November 9, 2009


10
.3110
.49

2009 Director Fees. +

10-Q

November 9, 2009


10
.3210
.50

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
.51

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
.4110
.52

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
.53

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
.54

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
.55

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
.56

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
.57

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
.47 136




---



##### 



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number10
.58

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
.59

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
.4910
.60

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
.61

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
.62

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
.63

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
.64

Eleventh 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

March 23, 2009


10
.110
.65

Twelfth Amendment to the Credit Agreement, dated April 28,
    2009, by and among Sunrise Senior Living, Inc., certain
    subsidiaries of Sunrise Senior Living, Inc. party thereto, the
    lenders from time to time party thereto and Bank of America, N.A.

8-K

April 28, 2009


10
.110
.66

Thirteenth Amendment to the Credit Agreement, dated
    October 19, 2009, by and among Sunrise Senior Living, Inc.,
    certain subsidiaries of Sunrise Senior Living, Inc. party
    thereto, the lenders from time to time party thereto and Bank of
    America, N.A.

8-K

October 20, 2009


10
.1 137




---



##### 



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number10
.67

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
.68

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
.69

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
.70

Multifamily Mortgage, Assignment of Rents and Security Agreement.

8-K

May 12, 2008


10
.110
.71

Discount MBS Multifamily Note.

8-K

May 12, 2008


10
.110
.72

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
.73

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
.210
.74

Pre-Negotiation and Standstill Agreement, dated
    February 19, 2009, by and among Sunrise Senior Living,
    Inc., Sunrise München-Thalkirchen Senior Living
    GmbH & Co. KG, Sunrise München- Thalkirchen GmbH
    and Natixis, London Branch.

8-K

February 20, 2009


10
.110
.75

Standstill Agreement, dated February 19, 2009, by and among
    Sunrise Senior Living, Inc., Sunrise München-Thalkirchen
    Senior Living GmbH & Co. KG, Sunrise
    München-Thalkirchen GmbH and Natixis, London Branch.

8-K

February 20, 2009


10
.210
.76

Letter Agreement, dated March 5, 2009, by and among Sunrise
    Senior Living, Inc., Sunrise Senior Living Development, Inc.,
    Sunrise Senior Living Investments, Inc., and Greystone
    Partners II LP.

8-K

March 11, 2009


10
.110
.77

First Amendment to Amended and Restated Pre-Negotiation and
    Standstill Agreement, dated March 31, 2009, by and among
    Sunrise Senior Living, Inc., Sunrise Hannover Senior Living
    GmbH & Co. KG, Sunrise Hannover GmbH and Natixis,
    London Branch.

8-K

April 6, 2009


10
.110
.78

Second German Standstill Agreement Hannover I, dated
    March 31, 2009, by and among Sunrise Senior Living, Inc.,
    Sunrise Hannover Senior Living GmbH & Co. KG, Sunrise
    Hannover GmbH and Natixis, London Branch.

8-K

April 6, 2009


10
.210
.79

First Amendment to Pre-Negotiation and Standstill Agreement,
    dated March 31, 2009, by and among Sunrise Senior Living,
    Inc., Sunrise München-Thalkirchen Senior Living
    GmbH & Co. KG, Sunrise München-Thalkirchen GmbH
    and Natixis, London Branch.

8-K

April 6, 2009


10
.3 138




---



##### 



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number10
.80

Second German Standstill Agreement, dated March 31, 2009,
    by and among Sunrise Senior Living, Inc., Sunrise
    München-Thalkirchen Senior Living GmbH & Co. KG,
    Sunrise München-Thalkirchen GmbH and Natixis, London Branch.

8-K

April 6, 2009


10
.410
.81

Restructure Term Sheet, dated October 22, 2009, by and
    among Sunrise Senior Living, Inc. and the creditors party
    thereto.

8-K

October 28, 2009


10
.110
.82

Settlement Agreement, dated as of October 26, 2009, by and
    among Sunrise Senior Living Investments, Inc., Senior Living
    Management, Inc., Sunrise Senior Living, Inc., US Senior Living
    Investments, LLC and Sunrise IV Senior Living Holdings, LLC.

8-K

October 28, 2009


10
.210
.83

Settlement Agreement, dated as of October 26, 2009, by and
    among Sunrise Senior Living Investments, Inc., Sunrise Senior
    Living, Inc., Fountains Senior Living Holdings, LLC, Sunrise
    Senior Living Management, Inc., US Senior Living Investments,
    LLC, HSH Nordbank AG, New York Branch.

8-K

October 28, 2009


10
.210
.84

Settlement Agreement, dated as of June 12, 2009, by and
    among Sunrise Senior Living, Inc. and the former majority
    stockholders of Trinity.

10-Q

November 9, 2009


10
.110
.85

Loan Agreement, dated as of September 28, 2007, by and
    among Sunrise Pasadena CA Senior Living, LLC and Sunrise
    Pleasanton CA Senior Living, LP, as borrowers, and Wells Fargo
    Bank, National Association, as lender.

10-Q

November 9, 2009


10
.210
.86

Letter Agreement, dated October 1, 2009, by and among
    Sunrise Pasadena CA Senior Living, LLC and Sunrise Pleasanton CA
    Senior Living, L.P., as borrowers, Sunrise Senior Living, Inc.,
    as guarantor, and Wells Fargo Bank, National Association, as
    lender.

10-Q

November 9, 2009


10
.310
.87

Loan and Security Agreement (Loan A), dated as of
    August 28, 2007, by and among Sunrise Connecticut Avenue
    Assisted Living, L.L.C., as borrower, and Chevy Chase Bank,
    F.S.B., as agent for the lenders party thereto.

10-Q

November 9, 2009


10
.410
.88

Guaranty of Payment (Loan A), dated as of August 28, 2007,
    by and among Sunrise Senior Living, Inc. and Chevy Chase Bank,
    F.S.B.

10-Q

November 9, 2009


10
.510
.89

Deed of Trust Note A, dated as of August 28,
    2007, by Sunrise Connecticut Avenue Assisted Living, L.L.C., as
    borrower, to MB Financial Bank, N.A.

10-Q

November 9, 2009


10
.610
.90

Deed of Trust Note A, dated as of August 28,
    2007, by Sunrise Connecticut Avenue Assisted Living, L.L.C., as
    borrower, to Chevy Chase Bank, F.S.B.

10-Q

November 9, 2009


10
.710
.91

Deed of Trust, Assignment, Security Agreement and Fixture Filing
    (Loan A), dated as of August 28, 2007, by Sunrise
    Connecticut Avenue Assisted Living, L.L.C., as grantor,
    Alexandra Johns and Ellen-Elizabeth Lee, as trustees, and Chevy
    Chase Bank, F.S.B., as agent.

10-Q

November 9, 2009


10
.8 139




---



##### 



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number10
.92

Loan and Security Agreement (Loan B), dated as of
    August 28, 2007, by and among Sunrise Connecticut Avenue
    Assisted Living, L.L.C., as borrower, and Chevy Chase Bank,
    F.S.B., as lender.

10-Q

November 9, 2009


10
.910
.93

Guaranty of Payment (Loan B), dated as of August 28, 2007,
    by and among Sunrise Senior Living, Inc. and Chevy Chase Bank,
    F.S.B.

10-Q

November 9, 2009


10
.1010
.94

Deed of Trust Note B, dated as of August 28,
    2007, by Sunrise Connecticut Avenue Assisted Living, L.L.C., as
    borrower, to Chevy Chase Bank, F.S.B.

10-Q

November 9, 2009


10
.1110
.95

Deed of Trust, Assignment, Security Agreement and Fixture Filing
    (Loan B), dated as of August 28, 2007, by Sunrise
    Connecticut Avenue Assisted Living, L.L.C., as grantor,
    Alexandra Johns and Ellen-Elizabeth Lee, as trustees, and Chevy
    Chase Bank, F.S.B.

10-Q

November 9, 2009


10
.1210
.96

First Amendment to Loan Agreement (Loan A), dated as of
    April 15, 2008, by and among Sunrise Connecticut Avenue
    Assisted Living, L.L.C., as borrower, and Chevy Chase Bank,
    F.S.B., as agent to the lenders party thereto.

10-Q

November 9, 2009


10
.1310
.97

First Amendment to Guaranty of Payment (Loan A), dated as of
    September 2008, by and between Sunrise Senior Living, Inc. and
    Chevy Chase Bank, F.S.B.

10-Q

November 9, 2009


10
.1410
.98

First Amendment to Loan Agreement (Loan B), dated as of
    April 15, 2008, by and among Sunrise Connecticut Avenue
    Assisted Living, L.L.C., as borrower, and Chevy Chase Bank,
    F.S.B. as lender.

10-Q

November 9, 2009


10
.1510
.99

First Amendment to Guaranty of Payment (Loan B), dated as of
    September 2008, by and between Sunrise Senior Living, Inc. and
    Chevy Chase Bank, F.S.B.

10-Q

November 9, 2009


10
.1610
.100

Second Amendment to Loan Agreement (Loan A), dated as of
    August 28, 2009, by and among Sunrise Connecticut Avenue
    Assisted Living, L.L.C., as borrower, and Chevy Chase Bank, a
    division of Capital One, N.A., as agent for the lenders party
    thereto.

10-Q

November 9, 2009


10
.1710
.101

Second Amendment to Guaranty of Payment (Loan A), dated as of
    August 28, 2009, by and between Sunrise Senior Living, Inc.
    and Chevy Chase Bank, a division of Capital One, N.A.

10-Q

November 9, 2009


10
.1810
.102

First Amendment to Deed of Trust Note A (Loan A),
    dated as of August 28, 2009,by and between Sunrise
    Connecticut Avenue Assisted Living, L.L.C., as borrower, and MB
    Financial Bank, N.A., as lender.

10-Q

November 9, 2009


10
.1910
.103

First Amendment to Deed of Trust Note A (Loan A),
    dated as of August 28, 2009, by and between Sunrise
    Connecticut Avenue Assisted Living, L.L.C., as borrower, and
    Chevy Chase Bank, a division of Capital One, N.A., as lender.

10-Q

November 9, 2009


10
.2010
.104

Second Amendment to Loan Agreement (Loan B), dated as of
    August 28, 2009, by and among Sunrise Connecticut Avenue
    Assisted Living, L.L.C., as borrower, and Chevy Chase Bank, a
    division of Capital One, N.A., as lender.

10-Q

November 9, 2009


10
.21 140




---



##### 



INCORPORATED BY REFERENCEExhibit







ExhibitNumber

Description

Form

Filing Date with SEC

Number10
.105

Second Amendment to Guaranty of Payment (Loan B), dated as of
    August 28, 2009, by and between Sunrise Senior Living, Inc.
    and Chevy Chase Bank, a division of Capital One, N.A.

10-Q

November 9, 2009


10
.2210
.106

First Amendment to Deed of Trust Note A (Loan B),
    dated as of August 28, 2009, by and between Sunrise
    Connecticut Avenue Assisted Living, L.L.C., as borrower, and
    Chevy Chase Bank, a division of Capital One, N.A., as lender.

10-Q

November 9, 2009


10
.2310
.107

Letter Agreement, dated December 1, 2009, by and among
    Sunrise Pasadena CA Senior Living, LLC and Sunrise Pleasanton CA
    Senior Living, L.P., as borrowers, Sunrise Senior Living, Inc.,
    as guarantor, and Wells Fargo Bank, National Association, as
    lender.

8-K

December 7, 2009


10
.110
.108

Third Amendment to Loan Agreement and Settlement Agreement (Loan
    A), effective as of December 2, 2009, by and among Sunrise
    Connecticut Avenue Assisted Living, L.L.C., as borrower, and
    Chevy Chase Bank, a division of Capital One, N.A., as agent for
    the lenders party thereto.

8-K

December 24, 2009


10
.110
.109

Third Amendment to Guaranty of Payment (Loan A), effective as of
    December 2, 2009, by and between Sunrise Senior Living,
    Inc. and Chevy Chase Bank, a division of Capital One, N.A.

8-K

December 24, 2009


10
.210
.110

Second Amendment to Deed of Trust Note A (Loan A),
    effective as of December 2, 2009, by and between Sunrise
    Connecticut Avenue Assisted Living, L.L.C., as borrower, and MB
    Financial Bank, N.A., as lender.

8-K

December 24, 2009


10
.310
.111

Second Amendment to Deed of Trust Note A (Loan A),
    effective as of December 2, 2009, by and between Sunrise
    Connecticut Avenue Assisted Living, L.L.C., as borrower, and
    Chevy Chase Bank, a division of Capital One, N.A., as lender.

8-K

December 24, 2009


10
.410
.112

Third Amendment to Loan Agreement and Settlement Agreement (Loan
    B), effective as of December 2, 2009, by and among Sunrise
    Connecticut Avenue Assisted Living, L.L.C., as borrower, and
    Chevy Chase Bank, a division of Capital One, N.A., as lender.

8-K

December 24, 2009


10
.510
.113

Third Amendment to Guaranty of Payment (Loan B), effective as of
    December 2, 2009, by and between Sunrise Senior Living,
    Inc. and Chevy Chase Bank, a division of Capital One, N.A.

8-K

December 24, 2009


10
.610
.114

Second Amendment to Deed of Trust Note B (Loan B),
    effective as of December 2, 2009, by and between Sunrise
    Connecticut Avenue Assisted Living, L.L.C., as borrower, and
    Chevy Chase Bank, a division of Capital One, N.A., as lender.

8-K

December 24, 2009


10
.710
.115

Amendment to Employment Agreement between Sunrise Senior Living,
    Inc. and Julie A. Pangelinan, dated July 9, 2009.+*

N/A

N/A


N/A10
.116

Separation Agreement between Sunrise Senior Living, Inc. and
    Daniel J. Schwartz, dated February 15, 2010.+*

N/A

N/A


N/A 141




---



##### 



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. 142