Third-quarter occupancy gains on the heels of finalization of a comprehensive restructuring plan are creating “significant momentum” and optimism for near-term outcomes for Sonida Senior Living heading into the fourth quarter, the company said Tuesday.
The Dallas-based senior living owner/operator reported that it had finalized a previously announced comprehensive restructuring of its loan modification agreements covering all 37 communities with Fannie Mae mortgages.
The loan modifications extend all maurities through December 2026 or later, with all principal payments deferred for three years or waived until maturity. Additionally, the near-term interest rate was reduced, and two $5 million principal payments against loan balances — one paid in June, with the second payment to be made in June 2024.
As previously announced, Conversant Capital committed to buy up to $13.5 million of common equity at $10 per share over an 18-month period. Sonida drew $6 million in July related to the first $5 million principal payment to Fannie Mae. The remaining funds may be drawn as needed for general working capital needs or to fund the second loan payment.
Ally Bank also agreed to temporarily reduce the minimum liquidity requirements for 18 months.
In a news release, Sonida said that the loan modification agreements, along with the modified liquidity requirements with Ally Bank, will contribute “significantly” to the company’s ongoing financial stability.The company is in discussion with Protective Life regarding potential modifications or repurchases as well.
The agreements follow a notice of “substantial doubt” about its ability to continue as a going concern in March and continued uncertainty about the company’s future in May, when Sonida detailed its plans to strengthen the company’s financial footing.
“Our performance throughout the year, coupled with the ongoing support from our investors and lenders, remains a key point of differentiation in the current economic climate,” Sonida Senior Living President and CEO Brandon Ribar said in a statement. “We believe Sonida is at an exciting inflection point with our balance sheet repositioning nearly behind us and continued portfolio performance improving, allowing us to pivot our focus towards growth.”
Ribar said that the company’s goal this year was to make improvements to its balance sheet, organizational structure and operations to position itself as the “consolidator of choice” in the industry.
In a performance update, Sonida reported that spot occupancy in September was 86.8% for its owned communities and that average occupancy for the third quarter had increased 100 basis points from the second quarter.
In addition, resident rates saw a year-over-year increase of 9.8% through the first nine months of 2023.
“The debt restructuring, along with strong Q3 occupancy gains, have created significant momentum for us as we move into the final quarter of the year,” Chief Financial Officer Kevin Detz said in a statement. “Our strong results and sequential improvement throughout the first nine months of the year are a testament to our ongoing focus on operational excellence and our team’s dedication to providing high-quality care and personalized service that enhances our residents’ quality of life.”