Sonida Senior Living looks to improve balance sheet, make investments with $47.7 million equity raise
A $47.7 million equity raise will help Sonida Senior Living improve its finances, invest in its communities and programming, and consider acquisitions, the Dallas-based owner-operator said Tuesday. The measure includes an investment from Conversant Capital, the company’s largest shareholder.
“Since Conversant made its original investment in Sonida in November 2021, we’ve been working diligently with the management team along three key initiatives: improving operations, strengthening the balance sheet and growing the business,” Michael Simanovsky, founder and managing partner of Conversant Capital, said in a press release. “Today’s transaction allows us to shift the company’s focus towards the third initiative: accelerating the growth of the business.”
Sonida has an “increasingly active pipeline of acquisitions,” he said.
Sonida said it plans to invest in high-returning capital projects within the company’s existing portfolio.
“This capital infusion, coupled with the steady, foundational margin improvements achieved over the past 12 months, allows the company to further focus on revenue-driving and margin-enhancing efforts and laying the groundwork for operational scalability as we look to grow the portfolio,” Sonida Chief Financial Officer Kevin Detz said.
Part of the proceeds will be used to purchase $77.4 million of mortgage indebtedness across seven Sonida communities for $40.2 million, representing a 48% discount; $25 million of equity capital will be available for potential acquisitions and working capital, according to the provider.
Specific planned capital expenditure projects include converting existing apartments to Magnolia Trails memory care units and opening additional wings within high-occupancy communities. Sonida said it also has budgeted to more quickly deploy recently introduced technology that it credits with improving operating efficiencies, quality of care and resident experience.
The 2021 launch of the company’s Magnolia Trails memory care program has delivered “exceptional” outcomes for residents and improved operations, Sonida President and CEO Brandon Ribar said previously. Memory care occupancy had reached 88% at the end of October.
“In an economic environment characterized by limited capital and available financing for senior living assets, we believe this transaction reflects our investors’ confidence in Sonida as a premium long-term investment and operating platform with significant upside potential,” Ribar said Tuesday.
During the company’s third-quarter earnings call in November, the CEO had said that “operational improvement to deliver all-in cash generation in 2024 is critical to establishing an attractive investment profile for Sonida.”
Tuesday’s announcement follows Sonida’s finalization of a restructuring of loan modification agreements covering 37 communities with Fannie Mae mortgages, which the company reported in October.
SeekingAlpha reported Tuesday that the company’s stock had risen 3% in pre-market trading Tuesday morning following the announcement.
