DALLAS - Sonida Senior Living, Inc. (NYSE: SNDA), a prominent owner-operator of senior living communities, has announced a $47.75 million equity private placement, with notable contributions from Conversant Capital, the company's principal shareholder. The capital injection aims to support Sonida’s balance sheet restructuring, enhance community facilities, and fuel potential acquisitions.
The equity was priced at $9.50 per share, a 5% premium over the 30-day volume-weighted average price before the deal's closure. The funding is structured in two parts: the first $32 million tranche closed on February 1, 2024, and the second $16 million tranche is expected to close by March 31, 2024, contingent on shareholder approval for an increase in the authorized common stock.
Sonida has utilized a portion of the funds to acquire $77.4 million worth of mortgage debt for $40.2 million, a 48% discount, from Protective Life on February 2, 2024. This move, financed by $24.8 million of mortgage debt from Ally Bank, reduces Sonida’s total debt by $52.6 million and yearly debt service by approximately $3.2 million. The company's total debt now stands at $580.7 million, with a weighted-average term of 3.7 years.
Kevin Detz, Sonida’s CFO, highlighted that this financial maneuver, coupled with consistent margin improvements over the past year, will allow the company to concentrate on revenue and margin growth and prepare for operational scalability.
The company plans to convert existing apartments into memory care units and expand highly occupied communities. They will also hasten the deployment of new technology to enhance operational efficiency, care quality, and resident experience.
After these transactions, Sonida will have approximately $25 million for potential acquisitions and working capital. The company is in advanced talks to acquire a majority stake in a four-asset portfolio, which would expand its presence in Texas and is expected to yield a double-digit stabilized cap rate.
The announcement comes at a time when senior living assets face restricted capital and financing availability, and Sonida’s recent moves reflect investor confidence in the company's long-term prospects. These initiatives are part of Sonida's growth strategy, as stated by Brandon Ribar, President and CEO, and Michael Simanovsky, Founder and Managing Partner of Conversant Capital.
The information in this article is based on a press release.
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