Fishers, IN-based healthcare real estate company Invesque and Dallas-based senior living provider Sonida Senior Living held second-quarter earnings calls on Monday.
Invesque ends SymCare relationship
Invesque continued to streamline and strengthen its portfolio through dispositions, operator transitions and an acquisition in the second quarter, the company said Monday during its earnings call updating investors on the results for the three and six months ended June 30.
As Invesque continues to change its focus to predominantly private-pay senior living, the company sold seven skilled nursing facilities previously leased to SymCare during the second quarter, and the eighth and final property was sold in early July, after the quarter ended. Invesque no longer leases any properties to SymCare. The total sales price for the eight SNFs was $121 million.
April 1, the Invesque entered into a 15-year lease with Chapters Living to manage three stand-alone memory care communities that previously were managed by Memory Care of America. The properties are located in Texas and Arkansas.
Also during the quarter, Invesque acquired a 34-unit memory care community in Carrollton, TX, which it then leased to Constant Care Management as part of a long-term lease.
Chief Financial Officer and Executive Vice President of Investments Adlai Chester said that funds from operations and adjusted funds from operations each were $0.10 per share. Stabilized senior housing operating portfolio earnings before interest, taxes, depreciation and amortization (EBIDTA) coverage remained just below 1.0 times for the period ended March 31.
As of March 31, “the trailing 12-month occupancy for the stabilized triple net assets and stabilized SHOP portfolio saw traction during the quarter, which translated into favorable operating results,” he said.
Chester did not provide numbers for the second quarter, but he said that the combination of occupancy growth and rate growth led to net operating income increase of 5.5% by the end of the second quarter.
Between March 31 and June 30, Chester said, Invesque paid down its corporate credit facility by more than $122 million. Since the second quarter ended, the company has repaid an additional $19.4 million as part of the sale of the final SymCare property, he said, which brought the total pay-down to more than $141 million.
“We believe these transactions substantially de-risk the portfolio that supports our corporate credit facility and positions us to work collaboratively with the bank group to extend the pending maturity of our corporate credit facility,” Chester said.
Invesque is working with KeyBank on an extension of the credit facility, which currently matures at the end of this year, he said.
“As part of the negotiation, we have agreed to restrictions on the amount of Sept. 30, 2023 convertible debentures that can be repaid. As an amendment to our current credit agreement, we agree that no more than 10% of the outstanding principal balance of those debentures will be repaid later this quarter,” Chester said. “This is a reduction in what had previously been agreed upon with the venture holders. But refinancing and extending the KeyBank credit facility is our highest priority. Our belief is that this was a necessary concession to lay the framework for finalizing a deal with Key.”
Invesque recently executed a non-binding agreement with Keybank to extend the credit facility until March 31, 2025. The company had shared details in an Aug. 7 press release.
For additional coverage of the earnings call, see McKnight’s Senior Living.
Sonida sees 9 consecutive quarters of revenue growth
The second quarter was “pivotal” for Sonida Senior Living, CEO and President Brandon Ribar said on Monday’s earnings call.
“We moved forward with the most aggressive rate push in the company’s recent history, all while pursuing foundational changes in our capital structure to create stability and runway for growth,” he said.
The Dallas-based operator has now seen nine consecutive quarters of revenue growth.
The adjusted community net operating income, which excludes state grant funds, improved 31% year over year and 16% sequentially to $13.2 million, which Ribar said was the highest level in three years. Adjusted earnings before interest, taxes, depreciation and amortization increased 84% year over year, to $7.5 million.
Excluding the effect of nonrecurring state grants, revenue per occupied room increased 4% from the first quarter of 2023 and 9% compared with the second quarter of 2022.
Sonida has completed an initial phase of debt restructuring with Fannie Mae and Ally Bank, which covers 49 of the 62 senior living properties it owns.
“I cannot stress enough appreciation towards Fannie Mae and Ally Bank for their partnership in reaching terms that will benefit all stakeholders and address multiple facets of our debt,” Chief Financial Officer Kevin Detz said.
Sonida entered into a forbearance agreement with Fannie Mae on June 29 with plans to modify the company’s mortgage loan agreements by Oct. 1. The forbearance agreement includes extending loan maturities to December 2026 or beyond, a move that increases the average portfolio maturity by more than one year.
“Addressing maturities was a significant priority for the company, as mortgages for 13 Fannie Mae communities were previously scheduled to mature in 2024,” Detz said.
Further, Sonida will receive near-term interest rate reduction on all 37 assets, resulting in
$6.1 million in cash interest savings over the next 12 months, he noted.
Ally Bank granted Sonida a waiver of its minimum liquidity requirement of $13 million under its guaranty for 12 months, which Detz said “provides the company with financial flexibility as it sequentially improves its all-in cash profile.”
Conversant Capital, which is Sonida’s largest individual shareholder, provided an equity commitment of $13.5 million. According to Detz, this commitment will bolster Sonida’s liquidity with draws to be requested by the operator as necessary.
“Beyond the short-term liquidity relief this recapitalization provides, it more importantly sets the company up for future long-term value creation and allows management to focus on its strategic growth initiatives in an unstable but opportunistic market,” Detz said.
For additional coverage of the earnings call, see McKnight’s Senior Living.
