Sonida Senior Living is still climbing back from the bottom, and its recent refinance of all near-term debt maturities is a big step forward. The Greystone Senior Housing Capital Markets team acted as exclusive advisor in arranging the financing for Sonida.
The transaction includes an initial term loan of $80 million and up to $50 million of additional capital, including an uncommitted $40 million accordion, to fund future growth initiatives. Secured by 10 Sonida communities, the term loan addresses all debt maturities through mid-2024 and reduced the company’s total debt by $38.5 million. There is an interest rate of one-month SOFR plus 3.50%, subject to a SOFR floor of 0.25% and a lower SOFR spread of 3.25% or 3.00% depending on the Company’s debt yield and debt service coverage ratio. So, the transaction reduced the blended interest rate for the portfolio by approximately 63 basis points and leaves open future opportunities for additional, performance-based interest rate reductions.
Continuing with the incentives, the initial term loan may also be increased by up to $10 million in two $5 million increments if certain financial performance metrics and other customer conditions are met. In addition, there is a maturity date of four years with optional one-year extension if certain financial performance metrics are met. Finally, an uncommitted $40 million accordion may be accessed to finance the acquisition of other senior living communities.
The agreements certainly show some caution, given the long road ahead for Sonida. Not that the company needs more motivation to turn things around, but the additional incentives certainly do not hurt either.
