New joint venture acquisitions in May and July
and previously announced acquisition in Q2 add nine communities to
Sonida’s owned senior living portfolio
Newly acquired assets continue to strengthen
Sonida’s portfolio quality with the addition of newer vintage,
high-quality real estate at significant discounts to replacement
cost
Sonida also enters into management agreements
on two new assets on behalf of a REIT partner
In Q2 2024, Company raised approximately $18.9
million in net proceeds through its at-the-market (ATM) equity
offering program to fund acquisitions
Company added to the Russell 3000® effective
July 1, 2024
Sonida Senior Living, Inc. (“Sonida” or the “Company”) (NYSE:
SNDA), a leading owner, operator and investor in communities and
services for seniors, today announced that in late May and early
July 2024, the Company executed two separate joint venture
investments acquiring eight senior living communities strategically
located in attractive submarkets within the Company’s geographic
footprint, creating further density in Texas and the Midwest and
allowing management to leverage market knowledge and create
operating efficiencies. The transactions include 790 units with
Independent Living, Assisted Living and Memory Care offerings.
Combined with the previously announced May 9, 2024 acquisition of a
100-unit Assisted Living and Memory Care senior living community in
Macedonia, Ohio, Sonida has added nine senior living communities to
its portfolio year-to-date, bringing its total owned senior living
portfolio to 70 communities. These acquisitions are consistent with
the Company’s acquisition framework of acquiring high-quality,
newer assets to which Sonida’s operating platform can add
significant value. Including the Company’s two new management
contracts, Sonida’s operating portfolio is comprised of 82
communities.
“These successful closings are the most recent wins in a
comprehensive strategy to judiciously grow Sonida’s portfolio
through creative deal structuring, expand its best-in-class
operating platform and ultimately achieve attractive returns upon
asset stabilization,” said Brandon Ribar, President and Chief
Executive Officer. “The acquired assets consist of exceptional
private-pay communities, with newer vintage construction and/or
material renovations within the last 10 years and are in
mid-to-large metropolitan areas with favorable growth prospects. We
continue to leverage our sourcing channels which enable us to
identify compelling investment opportunities and drive long-term
inorganic growth and value creation for our shareholders.”
Joint Venture Acquisition #1 (Sonida
51% Owner)
The first transaction, with joint venture partner Palatine
Capital Partners, includes the recapitalization of four senior
living communities in major metropolitan markets: San Antonio, TX
(2), Austin, TX (1) and Atlanta, GA (1). This brings the total
number of Texas owned properties to 19 and represents Sonida’s
entrance into Atlanta, a high-growth market that complements the
existing portfolio and further strengthens Sonida’s Southeast
presence.
The four assets are in strong submarkets and were built or
redeveloped an average of seven years ago but have not yet
stabilized since COVID. With 326 units and a wide variety of
amenities, the communities provide a tremendous opportunity for
Sonida, who will also operate the communities on behalf of the
joint venture for a market fee, bringing its best-in-class
operating platform to drive the portfolio’s recovery.
The assets were recapitalized at an implied valuation of $34.7
million, or $107,300 per unit. The transaction was financed with
approximately $21.8 million of mortgage debt from the existing
lenders, who collaboratively worked through favorable modifications
to the existing financing to allow the joint venture sufficient
duration and flexibility to stabilize the portfolio. At
stabilization, the investment is expected to deliver double-digit
Net Operating Income (“NOI”) yields by leveraging Sonida’s deep
local sales and marketing expertise as well as its proven labor
management processes.
Sonida, as a 51% owner in the joint venture, contributed $6.4
million in initial cash equity to the transaction.
Joint Venture Acquisition #2 (Sonida
33% Owner)
The second transaction, with joint venture partner KZ Family
Ventures, includes four senior living communities with 464 units in
the Cincinnati, OH (1), Cleveland, OH (1), Kansas City, MO (1) and
Louisville, KY (1) markets, bringing the total number of Ohio
properties to 13 (including Sonida’s previously announced second
quarter acquisition in Macedonia, OH). Although the first
Sonida-owned community in Kentucky, the Louisville asset
complements Sonida’s regional cluster in southern Indiana and
Cincinnati.
The upscale, highly amenitized assets were all recently
constructed with an average age of five years old but have not
stabilized due to under-management and leadership turnover. The
joint venture acquired the portfolio for $64.0 million, or less
than $140,000 per unit and closed on an all-cash basis with the
intent to assume moderate leverage post-close. At stabilization,
the transaction is expected to deliver double-digit NOI yields
through both occupancy and margin improvement. Sonida will operate
the assets on behalf of the joint venture for a market fee,
leveraging its deep regional support team in its Midwest
division.
Sonida, as a 33% owner in the joint venture, contributed $22.3
million in initial cash equity to close the transaction. Upon the
joint venture assuming moderate leverage post-close, a majority
portion of that outlay will be returned to the Company, providing
further capital for future Sonida acquisitions.
Operating Management
Contracts
On June 1, Sonida commenced management on two additional
properties located in Minnesota and Wisconsin for one of its REIT
partners. The Company intends to apply its proven systems for
near-term occupancy recovery. The management contracts have a
5-year term with extension options at the owner’s election. In Q3
2024, Sonida expects to assume management of one additional
community owned by the same REIT partner.
Capital Markets Update
Sonida disclosed that on April 1, 2024, it filed a prospectus
supplement with the U.S. Securities and Exchange Commission under
which it may offer and sell from time to time and at its
discretion, shares of its common stock having an aggregate offering
price of up to $75 million pursuant to an at-the-market (ATM)
securities offering program. Shares are offered pursuant to an at
the market sales issuance agreement between the Company and Mizuho
Securities USA LLC, who acts as the sole sales agent.
In Q2 2024, the Company utilized its ATM to sell 667,502 shares
of common stock at a weighted average price of $29.08 per share,
representing a total of approximately $19.4 million of gross
proceeds and approximately $18.9 million of net proceeds to the
Company since implementing the program.
The net proceeds were used to fund and execute on the
above-mentioned transactions, as well as working capital and other
general corporate purposes.
Sonida Added to Russell 3000®
Index
The Company has been added to the broad-market Russell 3000®
Index at the conclusion of the 2024 Russell Indexes annual
reconstitution, effective July 1, 2024.
The annual Russell U.S. Indexes reconstitution captures the
4,000 largest U.S. stocks as of Tuesday, April 30th, ranking them
by total market capitalization. Membership in the U.S. all-cap
Russell 3000® Index, which remains in place for one year, means
automatic inclusion in the large-cap Russell 1000® Index or
small-cap Russell 2000® Index, as well as the appropriate growth
and value style indexes. FTSE Russell, a prominent global index
provider, determines membership for its Russell indexes primarily
by objective, market-capitalization rankings, and style
attributes.
“Being included in the Russell Index is an important milestone
for Sonida and reflects the significant progress we continue to
make transforming the Company. Our inclusion will expand investor
awareness and broaden our shareholder base,” said Kevin Detz, Chief
Financial Officer of Sonida. “This marker coincides with an
exciting time for Sonida. With a strong foundation of operational
discipline and recent balance sheet and liquidity advancements, the
Company has meaningfully positioned itself for strategic expansion
and continued momentum, as we focus on continued shareholder value
creation for the remainder of 2024 and beyond.”
Safe Harbor
The forward-looking statements in this press release, including,
but not limited to, statements relating to the Company’s
acquisitions, are subject to certain risks and uncertainties that
could cause the Company’s actual results and financial condition to
differ materially, including, but not limited to the Company’s
ability to recognize the anticipated benefits of such acquisitions;
the impact of such acquisitions on the Company’s business; any
legal proceedings that may be brought related to such acquisitions;
and other risks and factors identified from time to time in the
Company’s reports filed with the SEC, including the Company’s
ability to generate sufficient cash flows from operations,
additional proceeds from debt financings or refinancings, and
proceeds from the sale of assets to satisfy its short-and long-term
debt obligations and to make capital improvements to the Company’s
communities; increases in market interest rates that increase the
cost of certain of the Company’s debt obligations; increased
competition for, or a shortage of, skilled workers, including due
to general labor market conditions, along with wage pressures
resulting from such increased competition, low unemployment levels,
use of contract labor, minimum wage increases and/or changes in
overtime laws; the Company’s ability to obtain additional capital
on terms acceptable to it; the Company’s ability to extend or
refinance its existing debt as such debt matures; the Company’s
compliance with its debt agreements, including certain financial
covenants and the risk of cross-default in the event such
non-compliance occurs; the Company’s ability to complete
acquisitions and dispositions upon favorable terms or at all; the
risk of oversupply and increased competition in the markets which
the Company operates; the Company’s ability to improve and maintain
controls over financial reporting and remediate the identified
material weakness discussed in its recent Quarterly and Annual
Reports filed with the SEC; the cost and difficulty of complying
with applicable licensure, legislative oversight, or regulatory
changes; risks associated with current global economic conditions
and general economic factors such as inflation, the consumer price
index, commodity costs, fuel and other energy costs, competition in
the labor market, costs of salaries, wages, benefits, and
insurance, interest rates, and tax rates; and changes in accounting
principles and interpretations.
About Sonida
Dallas-based Sonida Senior Living, Inc. is a leading owner,
operator and investor in independent living, assisted living and
memory care communities and services for senior adults. The Company
provides compassionate, resident-centric services and care as well
as engaging programming of 82 housing communities in 19 states with
an aggregate capacity of approximately 8,000+ residents, including
70 communities which the Company owns and 12 communities that the
Company manages on behalf of third parties.
For more information, visit www.sonidaseniorliving.com or
connect with the Company on Facebook, Twitter or LinkedIn.
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version on businesswire.com: https://www.businesswire.com/news/home/20240702384450/en/
Investor Relations Jason Finkelstein Ignition Investor
Relations ir@sonidaliving.com
Sonida Senior Living (NYSE:SNDA)
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