Sonida Senior Living (NYSE: SNDA) has “significant momentum” heading into the remainder of this year with a focus on growth, CEO Brandon Ribar told investors during a first quarter earnings call on Friday.
Moving into the second quarter, Ribar said the Dallas, Texas-based real estate investment trust (REIT) is continuing to pursue new growth this year via acquisition of new assets.
“We have swiftly moved into growth mode in Q2,” Ribar said during Friday’s earnings call. “We have a clear line of sight into further growth opportunities with similar return characteristics in the near-term pipeline.”
Sonida seeks further growth
Sonida is continuing its momentum in 2024 in part by continuing to grow.
That growth includes four transactions set to be complete by June. Ahead of Friday’s earnings call, Sonida outlined an acquisition of a 100-unit assisted living and memory care Ohio community bringing the company’s senior living portfolio to 72 communities. Sonida now has 11 communities in Ohio and further upgrades are expected throughout the portfolio, the release said.
In a news release issued earlier this week, Sonida outlined that the company was seeking to acquire an additional eight communities totaling 750 units with joint-venture partners, while growing the company’s “broadening management footprint” with three new management agreements to take place next month.
With a $10.3 million raised through equity offerings in April, Sonida has continued its acquisition strategy.
In the last three months, Ribar noted how Sonida had raised nearly $60 million in equity capital, with $35 million labeled for transactions expected to close in the next 90 days from both new and existing institutional capital investors eager to access senior living.
Acquisitions for Sonida stem from distressed senior living properties that couldn’t overcome the challenges of the Covid-19 pandemic. That’s spurred on Sonida to form an operational team dedicated to the integration of new communities into the fold.
“The energy and positive momentum is palpable across our entire company as we strive for further growth in our existing portfolio driven by operational excellence and further advancement in resident programming,” Ribar said.
Future growth would flow from capital and programming investment across its senior living portfolio are expected to wrap up updates in the second half of 2024.
Occupancy, revenue progress
Sonida executives also spent Friday’s call touting some of the company’s recent operational progress.
Sonida’s Magnolia Trails memory care programming has “produced exceptional outcomes” for the organization, delivering a 750-basis point increase in occupancy to nearly 88% in the first quarter across all Sonida memory care units.
“I remain confident in the capabilities and stability of our local and regional leadership to drive further occupancy rate and margin improvement throughout the year,” Ribar said during the earnings call.
Occupancy for Sonida sat at 86% in the first quarter of this year, in line with past quarters. An increase to resident rate on March 1 of 7% led to “higher than average” move-outs in that time, but the increase will support “significant revenue increases” for the remainder of the year.
Revenue for Sonida Senior Living was up 2.4% from last quarter and up 7.3% compared to this time last year, which dovetails with expanding margins. Earnings before interest, taxes, depreciation and amortization (EBITDA) is up more than 21% compared to this time last year and is up 2% from last quarter. Revenue per occupied room rose 8.4% this year and resident revenue was up 7.2% this year as a result of working on the company’s expense control.
The rosier picture of Sonida’s balance sheet comes after a year-long fight to improve revenue and solidify communities following a going concern notice being issued in March 2023. Sonida restructured its Fannie Mae debt last summer that allowed Sonida to “pivot to growth mode,” Ribar told SHN in February.
During the company’s 4Q23 earnings call in March, Ribar also highlighted the company’s $50 million equity private placement from Conversant Capital as fueling future growth.
Also on Friday, Sonida appointed Max Levy as the company’s newly-created Chief Investment Officer, along with Lilly Donohue being appointed to the company’s board of trustees. Levy joins from serving as the Principal at Conversant Capital. Levy will step down from the board and be appointed on June 1.
“Every stage in Max’s career has increased his investment management acumen and responsibility, ensuring he is extremely well-suited for this significant role,” Ribar said of hiring Levy.
With the return of “historic seasonality” within the senior living industry, Sonida leadership expects stabilizing margin to remain. That pairs with the company having completed care assessments for all resident leases, according to CFO Kevin Dietz.
“This positive margin trend should continue as a result of the company’s successful March 1 rate increases,” Dietz said during the earnings call.
