Conversant Capital has committed to purchase up to $13.5 million of common equity at $10 per share, a 30% premium to the stock’s 30-day volume weighted average price, over the next 18 months. Sonida shall have the right, but not the obligation, to utilize Conversant’s equity commitment and may draw on the commitment in whole or in part. The Company intends to draw $6.0 million in July, in conjunction with the first $5.0 million principal payment to Fannie Mae. The remaining funds may be drawn as needed for general working capital needs or to fund the second $5.0 million loan paydown to Fannie Mae.
“We appreciate the collaborative approach from our lending partners to make these commercially compelling modifications to our debt structure,” said Brandon Ribar, President and CEO of Sonida Senior Living. “These developments provide the Company with greater financial flexibility and runway to continue delivering operational improvement while providing the balance sheet capacity to pursue attractive growth opportunities, including both asset acquisitions and third-party management contracts.”
“We are pleased to support Sonida during this pivotal time and to facilitate this important step to secure the Company’s balance sheet with additional equity capital,” said Michael Simanovsky, Founder and Managing Partner of Conversant. “We believe that the current environment offers a compelling opportunity for Sonida, and we look forward to working with the Company and its world-class executive team to capitalize on the extremely attractive demographic and industry trends we see in senior housing to deliver value for residents, team members, the communities we operate and investors.”
The Company is in discussions with Protective Life Insurance Company in an attempt to resolve its non-compliance on certain non-recourse mortgage loan agreements totaling $72.1 million for four of the Company’s communities.
Operational Update
The Company delivered strong occupancy, rate, total revenue and margin growth in Q1 and anticipates each of those trends to continue in Q2. Spot occupancy ended May at 85.0% for its 62 owned communities and May average occupancy increased 45 basis points over April. These strong occupancy results are attributable to numerous strategic initiatives implemented by the Company’s operating team and align with Sonida’s increased focus on maximizing Net Operating Income across the portfolio.
“This operating momentum, combined with our improved balance sheet, positions us well to capture the incredibly attractive opportunities we see in our sector as demand grows amidst a prolonged suppression of supply. Our new leadership team plans to seize this opportunity and drive increased cash flow through a combination of growth investments and continued delivery of our excellent resident experience,” said Kevin Detz, Chief Financial Officer.
The Company will provide additional details on its financial and operating performance in connection with its Q2 earnings release in August.
Executive Appointments
Sonida also announced several new hires and internal promotions, ensuring it has top-tier leadership in place across the organization to continue driving growth, improving margin, delivering an outstanding resident experience and ultimately, creating value for its shareholders.
| | • | | Late last year, the Company announced the internal promotion of several long-tenured Sonida team members. Carole Burnell, Dawn Mount and Donna Brown were appointed Vice Presidents of Operations, each running one of the Company’s three geographic operating regions. |
| | • | | Reanae Clark has joined the Company as Vice President of Business Development and Acquisitions, and will lead Sonida’s reinvigorated growth initiatives across all markets. Clark has more than 15 years of experience in the senior housing sector, including as an investor, investment banker and operator. She joins from Orix Corporation USA where she most recently led origination and asset management of the Orix Municipal & Infrastructure senior housing credit portfolio. |
| | • | | Michael Karicher joined the Company in Q1 as Chief People Officer with more than 30 years of experience in human resources, accounting and finance across industries, including both hospitality and healthcare. Karicher joins Sonida from Remington Hotels/Ashford Hospitality where he was Executive Vice President of Human Resources. |
