UPDATE 1-Sunrise Senior settles lawsuits with HCP, shares jump

* Ends contract with HCP for 27 senior housing communities

* Sunrise to get $50 mln termination payment

* Shares rise as much as 48 pct (Adds analyst comments; updates stock movement)

Sept 1 (Reuters) - Shares of Sunrise Senior Living Inc (SRZ.N) jumped about 48 percent on Wednesday, a day after it settled lawsuits with peer HCP Inc (HCP.N) leading to a contract termination and a $50 million payment to Sunrise.

Sunrise said HCP ended the management contract on 27 of its 75 senior housing communities managed by Sunrise.

This eliminates underperforming assets that were likely to be an ongoing drain on the Sunrise's resources, Stifel Nicolaus analyst Jerry Doctrow said in a note to clients.

The 27 properties had an operating profit margin of 18.7 percent while the properties being retained by Sunrise have an operating profit margin of 28.8 percent, he added.

The Mclean, Virginia-based Sunrise received $40 million of the payment on Tuesday and the rest to be paid within the next 12 months.

Doctrow said the contract termination payment provides cash to resolve remaining debt maturities and fund capital needs.

Sunrise had been hit hard by the economic slowdown and had said last year that it might have to reorganize under bankruptcy protection if it could not reach agreements with lenders to restructure debt.

The senior living sector has been under pressure amid the U.S. housing market decline and recession as elderly homeowners were hesitant to sell their most important asset to move into managed care facilities. [ID:nN09265697]

Sunrise, a managed-care facilities operator, will also limit certain fees and charges for the remaining management contracts, Long Beach, California-based HCP said separately.

On April 30, a U.S. federal court had dismissed HCP's litigation where it sought among other things, termination of Sunrise as the manager of four HCP-owned properties. [ID:nASA00APZ]

Sunrise shares, which have lost nearly half their value in the last three months, were up 38 percent at $3.05 on the New York Stock Exchange. They touched a high of $3.26 earlier in the session. (Reporting by Shravya Jain in Bangalore; Editing by Gopakumar Warrier, Roshni Menon)