Sonida Senior Living (NYSE: SNDA) has announced a $47.75 million private equity raise to fund a purchase of debt while fueling capital investment within its existing portfolio.
The sum includes investment from its largest shareholder, Conversant Capital. Sonida will use the new capital to complete its balance sheet repositioning while continuing enhancements across its portfolio of assets to include programming and acquisition opportunities in the future, the company said in a news release.
The move “represents the first time we have raised capital to truly build the company and play offense, which is particularly exciting in a market where creativity and capital availability will be at a premium,” CEO Brandon Ribar told Senior Housing News in an email on Tuesday.
“The significant discount on our debt repurchase creates immediate equity value while still keeping the assets in our portfolio,” he said.
In August, Sonida took major steps toward improving operations and a recent restructuring as a “launching point” for future recovery and growth.
The effort comes after Sonida restructured its Fannie Mae debt commitments last summer, which allowed the company to “pivot to growth mode,” Ribar said.
The first tranche of $32 million closed on Feb. 1 and the second tranche of $16 million will close on or around March 31 and is subject to shareholder approval. A portion of the proceeds were used to purchase seven of its remaining loans with Protective Life. The purchase 52% of the outstanding debt of $77.4 million.
Sonida’s second largest lending partner, Ally Bank, provided $24.8 million in mortgage debt by extending the existing Ally Bank term loan, reducing total debt by 9% and resulting in an annual debt service savings of $3.2 million. Total debt for Sonida will be $580.7 million as of Feb. 2. The company’s debt now has a weighted average of 3.7 years with $31.8 million maturing in December of 2026.
In the last 12 months, Sonida has realized margin improvements, priming them to focus on driving revenue and setting the stage for creating operational scalability, according to CFO Kevin Detz.
Additionally, Sonida is “engaged in advanced discussions” with a private equity sponsor to acquire a majority interest in a four-asset portfolio, with three of the assets “reinforcing Sonida’s Texas footprint,” the news release states. The acquisition could result in a “double-digit” stabilized cap rate with “minimal incremental general and administrative expenses” used to manage the communities, the release said.
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