Shares of Sunrise Assisted Living Inc., which runs residences for the frail elderly, plunged 52.4 percent yesterday after the Fairfax company said it would earn much less than Wall Street expected during the third and fourth quarters.

Sunrise shares closed at $11.68 3/4, a 52-week low. As recently as Dec. 31, the stock was trading at $51.87 1/2, but it has been sliding for months.

Sunrise blamed its troubles largely on the unexpectedly weak performance of facilities acquired when it bought Karrington Health Inc. in May. The $178 million acquisition, in which Sunrise exchanged $76 million of stock and assumed debts of $102 million, expanded Sunrise's residential capacity by more than a third.

But that wasn't the only problem Sunrise cited. Other assisted-living developers have had difficulty borrowing money to build facilities that Sunrise was slated to manage, which delayed the company's receipt of management fees, and Sunrise properties in the Southeast have been less profitable than the firm anticipated.

The consensus estimate of Wall Street analysts surveyed by First Call Corp. was that Sunrise would earn $8.3 million for the third quarter, excluding gains from the sale of real estate, but Sunrise said yesterday that it expects to report income of about $2.8 million to $3.3 million, not counting the property sales.

Sunrise chief executive Paul J. Klaassen said he was reassuring residents and their families yesterday that "the company has never been stronger."

Sunrise expects pretax earnings to be 45 percent higher this year than last year, but analysts were expecting an 80 percent increase, Klaassen said. "The Street can be pretty . . . punishing if you miss your expectations," he said.

Sunrise viewed Karrington as a "turnaround" case when it bought the company, Klaassen said, but the turnaround is taking longer than planned.

The Karrington properties, concentrated in the Midwest, are about 75 percent occupied, up 9 percentage points since Sunrise acquired them. By contrast, facilities that Sunrise has owned for a year have an overall occupancy rate of 94.5 percent, Klaassen said.

To buy back depressed Sunrise shares, the company plans to accelerate sales of its properties, Klaassen said. Sunrise will continue to manage properties it sells, he said.

CAPTION: TAKING A PLUNGE

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